Question

At a production and sales level of 3,000 units, Bastion Company incurred $60,000 of fixed cost and $36,000 of variable cost. When 4,000 units of product are produced and sold the company's cost per unit is:

Answer 1

Answer:

$27 per unit

Explanation:

Given that,

At production and sales level of 3,000 units,

Fixed cost = $60,000

Variable cost = $36,000

Variable cost per unit:

= Variable cost ÷ No. of units produced and sold

= $36,000 ÷ 3,000

= $12 per unit

Hence,

At production and sales level of 4,000 units,

Total cost:

= Fixed cost + Variable cost

= $60,000 + (4,000 units × $12 per unit)

= $60,000 + $48,000

= $108,000

Therefore, the company's cost per unit is as follows;

= Total cost ÷ No. of units

= $108,000 ÷ 4,000

= $27 per unit