A company expects to produce and sell 5,000 units of a single product. The following additional company information is available:
$$\begin{array} { l r }
\text { Variable costs (per unit) } & \
\text { Production costs } & \$ 30 \
\text { Nonproduction costs } & \$ 2 \
\text { Fixed costs (in total) } & \
\text { Overhead } & \$ 100,000 \
\text { Nonproduction } & \$ 5,000
\end{array}$$
Compute this company's total cost per unit.

Question

A company expects to produce and sell 5,000 units of a single product. The following additional company information is available: 
$$\begin{array} { l r } 
\text { Variable costs (per unit) } & \
\text { Production costs } & \$ 30 \
\text { Nonproduction costs } & \$ 2 \
\text { Fixed costs (in total) } & \
\text { Overhead } & \$ 100,000 \
\text { Nonproduction } & \$ 5,000
\end{array}$$
Compute this company's total cost per unit.

Quizplus · Accepted Answer

The total cost per unit includes variable costs per unit ($30 + $2 = $32) and fixed costs per unit ($100,000 + $5,000) / 5,000 units = $21). Total cost per unit = $32 + $21 = $53.

A Company Expects to Produce and Sell 5,000 Units of a Single