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(Solved): Required: 1. What is the total operating cost at 1,000 units, and what is the average cost per unit ...
Required: 1. What is the total operating cost at 1,000 units, and what is the average cost per unit at 1,000 units? 2. What is the danger in using average cost to make predictions about costs are varying production levels?
Expert Answer
1. The requirement is to prepare schedule of cost. Given that, Total variable cost when the units produced are 2,000 is $ 3,000. Thus, variable cost per unit = Total variable cost/units produced i.e., 3,000/2,000 = $ 1.50 Fixed cost per unit is $ 2.