Paris Plastics has monthly fixed costs of $90,000,while its variable costs are $4.00 per unit.If the sales price of a unit is $16.00 and Paris Plastics sell 12,000 units,the company's average fixed costs per unit will be:
A)$11.50 per unit.
B)$4.00 per unit.
C)$7.50 per unit.
D)$12.00 per unit.

Question

Quizplus · Accepted Answer

To find the average fixed cost per unit, we need to first calculate the total cost (fixed + variable) and then divide it by the number of units sold.

Total cost = Fixed cost + Variable cost 
Total cost = $90,000 + ($4.00 x 12,000) 
Total cost = $90,000 + $48,000 
Total cost = $138,000

Average fixed cost per unit = Fixed cost / Number of units sold 
Average fixed cost per unit = $90,000 / 12,000 
Average fixed cost per unit = $7.50

Therefore, the average fixed cost per unit for Paris Plastics is $7.50 per unit (Option C).

Paris Plastics Has Monthly Fixed Costs of $90,000,while Its Variable