CAIE IGCSE Business Studies 7.2.2 total variable cost

Practise total-variable-cost questions by multiplying unit variable cost by output and showing the method before the final answer.

Exam points

Use variable cost per unit multiplied by output to calculate total variable cost.
Show the substitution, such as 18000×25 or $80×12000, before the answer.
Give the final cost clearly with currency or scale, such as dollars or millions.

[Maximum number: 2]

CTF is an ethical business. It manufactures a range of toys. CTF operates in a competitive market. Over the years technology has changed production at CTF. The Operations Manager is analysing break-even information. An extract of the cost and revenue data for product X is shown in Table 3.1. Following the closure of its local supplier, the Operations Manager is considering importing raw materials for product X.

Table 3.1

Calculate the total variable cost for product X .

Show your working.

Correct method:
$\text{total variable cost} =\text{output}\times\text{variable cost per unit} =18\,000\times 25 =\$450\,000$

Award 2 marks for the correct answer. Award 1 mark for the correct method with an incorrect answer.

Award only 1 mark if $\$450\,000$ appears in the working but is not given as the final answer. The dollar sign is not required.

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7.2.2—Total variable cost question 1