At a sales volume of 25 units the average cost is $205 per unit and the variable cost is $5 per unit. Assuming a linear cost behavior pattern, if sales double to 50 units the average cost will be:
A) $110
B) $105
C) $205
D) $210

Question

Quizplus · Accepted Answer

Variable cost = $5 x 25 units = $125
Total cost = $205 x 25 units = $5,125
Fixed cost = $5,125 - $125 = $5,000
Variable cost for 50 units = $5 x 50 units = $250
Fixed cost = $5,000
Total cost = $5,000 + $250 = $5,250
Average per unit cost = $5,250 / 50 units = $105
Exercises

At a Sales Volume of 25 Units the Average Cost