Zach Company produces and sells a product that has variable costs of $7 per unit and fixed costs of $200,000 per year.If 40,000 units are produced and sold in a year,what is the total cost per unit?
A) $7
B) $10
C) $12
D) $17

Question

Quizplus · Accepted Answer

The total cost per unit is calculated by adding the variable cost per unit to the fixed cost per unit. The fixed cost per unit is the total fixed costs divided by the number of units produced and sold. Fixed cost per unit = $200,000 / 40,000 = $5. Total cost per unit = $7 (variable cost) + $5 (fixed cost) = $12.

Zach Company Produces and Sells a Product That Has Variable