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This is the thing that confuses me. As I was taught variable cost per unit is supposed to be fixed throughout the accounting period.
A ltd makes only one product which is sold through agents who receive a Commission of 10%.
When output level is 1000units.
Selling price per unit is rm80.
Hence, Commission for agent for a unit is Rm8.Here comes the question. If the output were to rise up to 1200units. The selling price will fall to rm70 per unit. What is the amount should be paid to the agent for a unit of good sold? Rm8 or Rm7?
Please answer asap.
In future, if you wish for me to answer then you should ask in the Ask the Tutor Forum – this forum is for students to help each other.
The variable cost per unit does usually remain fixed, but it certainly does not have to. In this question is the commission is to stay at 10% then the amount to pay will fall to Rm 7 per unit.
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