Harper Inc. has fixed costs of $600,000 when it produces 300,000 units. Its total variable costs are $150,000. When Harper Inc. produces 400,000 units, its variable cost per unit will be
A)$2.00.
B)$0.38.
C)$2.50.
D)$0.50.

Question

Quizplus · Accepted Answer

Variable cost per unit is calculated by dividing total variable costs by the number of units produced. At 300,000 units, the variable cost per unit is $150,000 / 300,000 = $0.50. Since variable costs per unit remain constant, at 400,000 units, it will still be $0.50.