Answer:
$2,900
Explanation:
If we use a cost function, it will be easy to understand. Cost function = (variable cost per unit × quantity) + fixed cost.
Here,
Direct cost per snowmobile = $2,000. It is the variable cost.
Overhead cost = $90,000. It is a fixed cost.
Total snowmobiles = 100 units
Total cost = ($2,000 × 100 snowmobiles) + $90,000
Total cost = $290,000
We know,
Average cost per snowmobile = Total cost ÷ total quantity
Average cost per snowmobile = $290,000 ÷ 100
Average cost per snowmobile = $2,900
