Question

Total fixed costs for Diamond Enterprises are $700,000. Total costs, including both fixed and variable, are $920,000 if 140,000 units are produced. The fixed cost per unit at 200,000 units would be

Answer 1

It is a variable it equals 100000 x plus b

Answer 2

$3.5 per unit

Step-by-step explanation:

Variable costs are those will vary will the change in sale or activity level e.g material cost, labor cost etc.

Fixed costs are those which remains fix and does not vary with the change in sale or activity level.

Total cost = $920,000

Total Fixed cost = $700,000

Variable cost = $920,000 - $700,000 = $220,000

Number s of Unit = 200,000 units

Fixed cost per unit = $700,000 / 200,000 units = $3.5 per unit