Question

Sunn Company manufactures a single product that sells for $165 per unit and whose variable costs are $132 per unit. The company's annual fixed costs are $498,300. What is the total cost per unit for the product?

1) $297
2) $297.50
3) $297.75
4) $298

Answer 1

To calculate the total cost per unit, add the variable costs per unit to the fixed costs and divide by the number of units produced.

Step-by-step explanation:

To calculate the total cost per unit, we add the variable costs per unit to the fixed costs and divide by the number of units produced.

Variable cost per unit = $132

Fixed costs = $498,300

Total cost per unit = (Variable cost per unit + Fixed costs) / Number of units produced

Total cost per unit = ($132 + $498,300) / 1

Total cost per unit = $498,432 / 1

Total cost per unit = $498,432.

Therefore, the total cost per unit for the product is $498,432.