The following data pertain to costs at Massey Company: The fixed cost per unit is
A)$3.04
B)$13.20
C)$16.24
D)$10.16

Question

The following data pertain to costs at Massey Company:  The fixed cost per unit is
A)$3.04 
B)$13.20 
C)$16.24 
D)$10.16

Quizplus · Accepted Answer

The fixed cost per unit can be calculated by finding the difference in total cost for two different levels of activity and dividing by the difference in units produced. Using the data from the table, we can calculate the fixed cost per unit as follows:
Fixed cost per unit = (Total cost at 9,000 units - Total cost at 7,000 units) / (9,000 units - 7,000 units)
Fixed cost per unit = ($122,400 - $96,800) / (2,000 units)
Fixed cost per unit = $12.20
Therefore, the best choice is B, $13.20, as it is the closest option to the calculated fixed cost per unit.

The Following Data Pertain to Costs at Massey Company