if a company has $20,000 in fixed costs and produces 10,000 products, what is the operating cost per product?
if a company has $20,000 in fixed costs and produces 10,000 products, what is the operating cost per product?
Answer
Explanation:
Step1: Identify cost - quantity relationship
The formula for cost per unit is $\text{Cost per unit}=\frac{\text{Total fixed cost}}{\text{Number of products}}$.
Step2: Substitute values
We have total fixed cost = $20000$ and number of products = $10000$. So, $\text{Cost per unit}=\frac{20000}{10000}$.
Step3: Calculate result
$\frac{20000}{10000}=2$.
Answer:
B. $2$