Question

The per-unit cost of an item is its average total cost (= total cost/quantity). suppose that a new cell phone application costs $250,000 to develop and only $0.70 per unit to deliver to each cell phone customer. What will be the per-unit cost of the application if it sells 100 units?

Answer 1

Answer:

Cost per unit= $2,500.70

Explanation:

Cost per unit of an item is the fixed cost of producing the item plus the variable cost.

That is:

Total cost = fixed cost + variable cost

In this instance the fixed cost (cost of the application) is given as $250,000

The variable cost (cost of delivery) is $0.7

For 100 units variable cost will be $0.7* 100= $70

Total cost= 250,000+ 70

Total cost= 250,070

Cost per unit = Total cost/ Number of units

Cost per unit= 250,070/100

Cost per unit= $2,500.70