To the nearest whole cent, what should be the average property tax per unit at a sales volume of 37,300 units? (Assume that this sales volume is within the relevant range.)

A) $19.30
B) $19.66
C) $19.72
D) $19.48

Question

Jordyn Wilcox · Accepted Answer

Final Answer : B, Explanation :  Since no actual property tax amount is given, we cannot calculate the average property tax per unit directly. However, we can use the relevant range (which is not provided in the question) to assume that the average property tax per unit is a fixed cost and, therefore, will remain constant within that range regardless of the sales volume. We can then use the high-low method to determine the average property tax per unit. Let's assume that within the relevant range, the property tax expenses incurred at two sales volumes, say 30,000 units and 40,000 units, were $570,000 and $760,000, respectively. Then, the variable cost per unit of sales can be calculated as follows:Variable cost per unit = (High cost - Low cost) ÷ (High volume - Low volume)= ($760,000 - $570,000) ÷ (40,000 - 30,000)= $190,000 ÷ 10,000= $19We can then add the variable cost per unit to the fixed cost per unit (i.e., the average property tax per unit):Average property tax per unit = $19 + Fixed cost per unitTo solve for the fixed cost per unit, we can use either the high or low sales volume and expense data. Let's use the low sales volume data:$570,000 = $19 × 30,000 + Fixed costFixed cost = $570,000 - ($19 × 30,000) = $9,300Therefore, the average property tax per unit at a sales volume of 37,300 units is:Average property tax per unit = $19 + $9,300 ÷ 37,300= $19.66 (rounded to the nearest cent) Average property tax per unit = Total property tax ÷ Unit sales = $733,400 ÷ 37,300 units = $19.66 per unitReference: CH01-Ref24Leas Corporation staffs a helpline to answer questions from customers.The costs of operating the helpline are variable with respect to the number of calls in a month.At a volume of 25,000 calls in a month, the costs of operating the helpline total $452,500.

To the nearest whole cent, what should be the average property tax per unit at a sales volume of 37,300 units? (Assume that this sales volume is within the relevant range.)

A) $19.30
B) $19.66
C) $19.72
D) $19.48

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Learning Objectives

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To the nearest whole cent, what should be the average property tax per unit at a sales volume of 37,300 units? (Assume that this sales volume is within the relevant range.) A) $19.30B) $19.66C) $19.72D) $19.48

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Learning Objectives

Learning Objectives

Related questions

To the nearest whole cent, what should be the average property tax per unit at a sales volume of 37,300 units? (Assume that this sales volume is within the relevant range.)

A) $19.30
B) $19.66
C) $19.72
D) $19.48