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 total variable cost per unit will be
A)$152,000.
B)$225,000.
C)$200,000.
D)$150,000.

Question

Quizplus · Accepted Answer

Variable costs per unit remain constant regardless of the number of units produced. Therefore, the total variable cost per unit when producing 300,000 units is $150,000 / 300,000 = $0.50. When producing 400,000 units, the total variable cost will be 400,000 * $0.50 = $200,000.