What is the variable cost per acre in this scenario?

What is the variable cost per acre in this scenario?

• A. $200
• B. $400
• C. $600
• D. $800

Answer: (B)

Variable costs are the expenses that change directly with how much land you farm. To find the variable cost per acre, add up all the costs that vary with acres and divide by the number of acres you planted. In this scenario, doing that division gives 400 dollars per acre. For example, if total variable costs were 8,000 for 20 acres, you’d have 8,000 ÷ 20 = 400 per acre. The other figures would require a different total variable cost or a different number of acres than what this scenario uses. So the per-acre variable cost is 400.

Variable costs are the expenses that change directly with how much land you farm. To find the variable cost per acre, add up all the costs that vary with acres and divide by the number of acres you planted. In this scenario, doing that division gives 400 dollars per acre. For example, if total variable costs were 8,000 for 20 acres, you’d have 8,000 ÷ 20 = 400 per acre. The other figures would require a different total variable cost or a different number of acres than what this scenario uses. So the per-acre variable cost is 400.