The total fixed costs are $10,000, and the average variable cost per unit is $3. For a production volume of 10,000 units, the average cost per unit is
A) $3.00
B) $1.00
C) $4.00
D) $3.30
E) $10.00

Question

Quizplus · Accepted Answer

The average cost per unit is calculated by adding the total fixed costs to the total variable costs and then dividing by the number of units. Here, total variable costs are 10,000 units * $3/unit = $30,000. Total costs are $10,000 (fixed) + $30,000 (variable) = $40,000. Dividing by 10,000 units gives an average cost per unit of $4.00.

The Total Fixed Costs Are $10,000, and the Average Variable