A company expects to produce and sell 7,000 units of a single product.The following additional company information is available:
$$\begin{array} { l r r }
\text{Variable costs (per unit)}&&\
~\text{Production costs}&&\$20\
~\text{Nonproduction costs}&&\$3\
\text{Fixed costs (in total)}&&\
~\text{Overhead}&&\$175,000\
~\text{Nonproduction}&&\$14,000\
\end{array}$$
Compute this company's total cost per unit.
A) $23
B) $45
C) $27
D) $50
E) $5

Question

A company expects to produce and sell 7,000 units of a single product.The following additional company information is available:
$$\begin{array} { l r r } 
\text{Variable costs (per unit)}&&\
~\text{Production costs}&&\$20\
~\text{Nonproduction costs}&&\$3\
\text{Fixed costs (in total)}&&\
~\text{Overhead}&&\$175,000\
~\text{Nonproduction}&&\$14,000\
\end{array}$$
Compute this company's total cost per unit.
A) $23
B) $45
C) $27
D) $50
E) $5

Quizplus · Accepted Answer

Total costs: [($20 + $3) x 7,000 units] + $175,000 + $14,000 = $350,000
Total cost per unit: $350,000/7,000 units = $50

A Company Expects to Produce and Sell 7,000 Units of a Single