1. Company: Theta Automotive

Scenario: Fixed and Variable Cost Analysis

Data:

• Monthly Fixed Costs: $300,000
• Variable Costs per Unit: $200
• Units Produced and Sold: 2,000

Requirements:

1. Calculate the total monthly costs.
2. Determine the cost per unit.
3. Analyze the effect of increasing production by 500 units on total and per-unit costs.
4. Discuss the importance of understanding fixed and variable costs in pricing decisions.
5. Recommend strategies to manage fixed and variable costs effectively.