A company has fixed costs of €185,000 and variable costs of €10 per unit. What are the costs per unit if: i) 25,000 units are produced and ii) 65,000 units are produced?
A) i) €17.40 and ii) €12.85
B) i) €19.56 and ii) €15.32
C) i) €25.50 and ii) €18. 37
D) i) €28.42 and ii) €22.96

Question

Quizplus · Accepted Answer

For i) Total cost = Fixed costs + (Variable cost per unit * Number of units) = €185,000 + (€10 * 25,000) = €435,000. Cost per unit = Total cost / Number of units = €435,000 / 25,000 = €17.40. For ii) Total cost = €185,000 + (€10 * 65,000) = €835,000. Cost per unit = €835,000 / 65,000 = €12.85.

A Company Has Fixed Costs of €185,000 and Variable Costs