Activity

1. PizzaRap Corp. has P34,000.00 monthly expenses on total fixed cost, which represent the
managers’ salaries for four (4) consecutive months. They produced 10,000 units on January,
20,000 units on February, 15,000 units on March and 40,000 units on April.

Question: Compute for the fixed cost per unit per month using the FC per unit formula.

ILLUSTRATION:

Month Units produced Total fixed cost FC per unit

January 10,000 P34,000.00 P3.4
February 20,000 P34,000.00 P1.7
March 15,000 P34,000.00 P2.27
April 40,000 P34,000.00 P0.85

2. Suppose that a company’s variable cost per unit for the month includes production labor of
P0.05 and P0.10 raw materials. The company produced 100,000 units.

Question: What is the total variable cost (TVC)?

ILLUSTRATION:

Production Labor Raw Materials

Production in units 100,000 100,000

Variable cost per unit P0.05 P0.10

Total Variable Cost P5,000 P10,000