A company has a total cost of $50,000 for producing 1,000 units. If the fixed co

₹0.0

Question: A company has a total cost of $50,000 for producing 1,000 units. If the fixed cost is $20,000, what is the variable cost per unit?

Options:

Correct Answer: $25

Solution:

Total variable cost = Total cost - Fixed cost = $50,000 - $20,000 = $30,000. Variable cost per unit = $30,000 / 1,000 = $30.

A company has a total cost of $50,000 for producing 1,000 units. If the fixed cost is $20,000, what is the variable cost per unit?

A company has a total cost of $50,000 for producing 1,000 units. If the fixed cost is $20,000, what is the variable cost per unit?

Step 1: Identify the total cost of producing the units, which is $50,000.
Step 2: Identify the fixed cost, which is $20,000.
Step 3: Calculate the total variable cost by subtracting the fixed cost from the total cost: $50,000 - $20,000.
Step 4: The result of the subtraction gives you the total variable cost, which is $30,000.
Step 5: Determine the number of units produced, which is 1,000 units.
Step 6: Calculate the variable cost per unit by dividing the total variable cost by the number of units: $30,000 / 1,000.
Step 7: The result of the division gives you the variable cost per unit, which is $30.

Total Cost Calculation – Understanding the relationship between total cost, fixed cost, and variable cost.
Variable Cost per Unit – Calculating the variable cost per unit by dividing total variable cost by the number of units produced.