If a company has fixed costs of $5,000 and variable costs of $15 per unit, what is the marginal cost per unit?
Practice Questions
1 question
Q1
If a company has fixed costs of $5,000 and variable costs of $15 per unit, what is the marginal cost per unit?
$5
$15
$20
$25
Marginal cost is equal to variable cost per unit, which is $15.
Questions & Step-by-step Solutions
1 item
Q
Q: If a company has fixed costs of $5,000 and variable costs of $15 per unit, what is the marginal cost per unit?
Solution: Marginal cost is equal to variable cost per unit, which is $15.
Steps: 5
Step 1: Understand what fixed costs are. Fixed costs are expenses that do not change with the level of production, like rent or salaries.
Step 2: Understand what variable costs are. Variable costs are expenses that change with the level of production, like materials or labor per unit produced.
Step 3: Identify the variable cost per unit given in the question. It is $15 per unit.
Step 4: Know that marginal cost is the cost of producing one more unit. In this case, it is equal to the variable cost per unit.
Step 5: Conclude that the marginal cost per unit is the same as the variable cost per unit, which is $15.
