This is the per unit variable cost. The question is asking for the average total cost per unit, which includes both variable and fixed.
This is the average cost per unit of cost X at a production level of 3,000 units.
This is the average cost per unit of cost X at a production level of 9,000 units.
The question is asking for the average cost per unit of cost X at a production level of 8,000 units, a production level not given in the table, which includes both fixed and variable costs. To solve this, we will first need to estimate the total costs for cost X at a production level of 8,000 units and then find the average cost per unit. To find the total of cost X at that level, we need to find how much of the historical cost is fixed cost and how much is variable cost. Based on the given information, the High-Low Points Method is the best method to use to separate these costs. First, calculate the variable portion of the cost. This is done by dividing the difference between the highest and the lowest total cost for X by the difference between the associated number of units produced. The result is the variable cost per unit produced of X: ($178,260 ? $23,700) / (35,000 ? 3,000) = $4.83 variable cost per unit of X produced The next step is to find the fixed cost using the following equation: FC = Total Cost ? Variable Cost We can solve the above equation using the data from either the highest or the lowest observation. Using the highest observation, this will be: FC = $178,260 ? ($4.83 × 35,000) FC = $9,210 Next, we use this fixed cost and the variable cost per unit to find the total cost at a production level of 8,000: TC = FC + VC TC = $9,210 + ($4.83 × 8,000) TC = $47,850 The final step is to calculate the average total cost at the production level of 8,000 by dividing the total cost by 8,000: $47,850 ÷ 8,000 = $5.98
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What is the average cost per unit at a production level of 8,000 units for cost X?