Joshua Company produces and sells a product that has variable costs of $7 per unit and fixed costs of $200,000 per year.If production increases from 20,000 units to 25,000 units,the unit cost will ________.
A)increase by $35,000
B)decrease by $2 per unit
C)decrease by $8 per unit
D)stay the same

Question

Quizplus · Accepted Answer

The fixed costs are spread over more units as production increases, reducing the fixed cost per unit. The fixed cost per unit decreases from $10 ($200,000/20,000) to $8 ($200,000/25,000), resulting in a $2 decrease per unit.

Joshua Company Produces and Sells a Product That Has Variable