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Reducing variable production costs

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A company estimates that spending $29,500 in employee training will result in reducing variable production costs by 6%. Production and sales amount to 4,400 units. Selling price is $200 per unit and total product cost is $150 - 60% of which is variable cost. What is the advantage / disadvantage of this action?

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Units sold = 4400

Selling Price = $200

Cost = $150

Variable cost = 60% x 150 = $90

Fixed cost = 150 - 90 = ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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