Question

Kubin company’s relevant range of production is 20,000 to 23,000 units. when it produces and sells 21,500 units, its average costs per unit are as follows:

Answer 1

The cost per unit is derived from the variable costs and fixed costs incurred by a production process, divided by the number of units produced. Hypothetically lets say variable costs for Kubin company's production is $50,000 and their fixed costs are $25,000. $50,000 variable costs + $25,000 fixed costs / 21,500 units = $3.49/unit.