In a particular process, the fixed costs are calculated at $40,000 and the variable costs at $1.50 per unit.
If 10,000 units are to be produced, what is the average cost per unit?
A) $1.50
B) $2.00
C) $4.00
D) $5.50
E)none of the above

Question

Quizplus · Accepted Answer

The total cost is the sum of fixed costs and variable costs. Fixed costs are $40,000, and variable costs for 10,000 units are $1.50 * 10,000 = $15,000. The total cost is $40,000 + $15,000 = $55,000. The average cost per unit is $55,000 / 10,000 = $5.50.

In a Particular Process, the Fixed Costs Are Calculated at $40,000