Question

The following costs were for Optimal View Inc., a contact lens manufacturer: Output Fixed Cost Variable Cost Total Costs 300 $5,200 $12,000 $17,200 350 5,200 14,000 19,200 400 5,200 16.000 21,200 450 5,200 18,000 23,200 At an output level of 500 lenses, per unit total cost is projected to be: $48.56. $56.67. $50.40. $45.85. $39.45.

Answer 1

$50.40

Step-by-step explanation:

Calculation for per unit total cost

First step is to calculate the Unit variable cost

Unit variable cost = ($23,200 -$17,200)/(450-300)

Unit variable cost= $40

Second step is to calculate Fixed cost

Fixed cost = $23,200 -($40 x 450)

Fixed cost = $5,200

Third step is to calculate Total cost

Total cost = $5,200 + ($40 x 500)

Total cost = $25,200

Now let calculate Total cost per unit using this formula

Total cost per unit=Total cost/Output level

Let plug in the formula

Total cost per unit = $25,200/500 = $50.40

Therefore At an output level of 500 lenses, per unit total cost is projected to be: $50.40