Master the ACCA Management Accounting F2 in 2025 – Unleash Your Number-Crunching Power!

To determine the variable cost per unit, we can analyze the total costs associated with different production levels and identify the variable costs involved.

First, we calculate the total cost at each production level and the corresponding cost per unit.

1. For the first scenario with total costs of $20,000 for 4,000 units:

- Total cost per unit = Total costs / Number of units = $20,000 / 4,000 = $5.00 per unit.

2. For the second scenario with total costs of $40,000 for 20,000 units:

- Total cost per unit = Total costs / Number of units = $40,000 / 20,000 = $2.00 per unit.

Now, we observe that the total cost per unit changes as production increases. The variable cost is the cost that changes with the number of units produced. To find the variable cost per unit, we can analyze the change in total cost relative to the change in units produced.

The increase in total costs from $20,000 to $40,000 corresponds with an increase in production from 4,000 units to 20,000 units.

The change in total cost is $40,000 - $20