The fixed costs per unit are $10 when a company makes 10 000 units. What are the per unit fixed costs when 12 500 units are produced?
A) $6.00
B) $12.00
C) $10.00
D) $ 8.00

Question

Quizplus · Accepted Answer

Fixed costs remain constant in total, so when production increases, the fixed cost per unit decreases. If fixed costs are $10 per unit for 10,000 units, the total fixed cost is $100,000. When 12,500 units are produced, the fixed cost per unit is $100,000 / 12,500 = $8.00.

The Fixed Costs Per Unit Are $10 When a Company