Question

Fixed cost per unit is $10 when 12,000 units are produced and $3 when 40,000 units are produced. What is the total fixed cost when nothing is produced?

Answer 1

$10 x 12,000 = $120,000 and $3 x 40,000 = $120,000. Therefore, the total fixed cost is $120,000. 

Answer 2

No fixed cost per unit

Step-by-step explanation:

when 12000 units is produced the cost per unit is $10

therefore total cost = 12000 * $10 = $120000

when 40000 units are produced the cost per unit is $3

therefore total cost = 40000 * $3 = $120000

when 0 units are produced the fixed cost per unit is $ x

therefore total cost = 0 * x = $120000

x = $120000 / 0 = No fixed cost