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A company incurs a total cost of $50,000 for producing 5,000 units. What is the

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Question: A company incurs a total cost of $50,000 for producing 5,000 units. What is the average cost per unit?

Options:

  1. $8
  2. $10
  3. $12
  4. $15

Correct Answer: $10

Solution: 

Average Cost per Unit = Total Cost / Number of Units = $50,000 / 5,000 = $10.

A company incurs a total cost of $50,000 for producing 5,000 units. What is the

Practice Questions

Q1
A company incurs a total cost of $50,000 for producing 5,000 units. What is the average cost per unit?
  1. $8
  2. $10
  3. $12
  4. $15

Questions & Step-by-Step Solutions

A company incurs a total cost of $50,000 for producing 5,000 units. What is the average cost per unit?
  • Step 1: Identify the total cost of production, which is $50,000.
  • Step 2: Identify the total number of units produced, which is 5,000.
  • Step 3: Use the formula for average cost per unit: Average Cost per Unit = Total Cost / Number of Units.
  • Step 4: Substitute the values into the formula: Average Cost per Unit = $50,000 / 5,000.
  • Step 5: Perform the division: $50,000 divided by 5,000 equals $10.
  • Step 6: Conclude that the average cost per unit is $10.
  • Average Cost Calculation – The average cost per unit is calculated by dividing the total cost by the number of units produced.
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