Total fixed costs for Diamond Enterprises are $700,000. Total costs, including both fixed and variable, are $920,000 if 140,000 units are produced. The fixed cost per unit at 200,000 units would be
A)$3.50/unit.
B)$6.57/unit.
C)$4.60/unit.
D)$1.10/unit.

Question

Quizplus · Accepted Answer

Fixed costs remain constant regardless of the number of units produced. Therefore, the fixed cost per unit decreases as the number of units produced increases. At 200,000 units, the fixed cost per unit is $700,000 / 200,000 units = $3.50/unit.

Total Fixed Costs for Diamond Enterprises Are $700,000