question archive Solomon Corporation incurs the following annual fixed costs: Item Cost Depreciation $ 60,000 Officers' salaries 120,000 Long-term lease 95,000 Property taxes 7,000 Required Determine the total fixed cost per unit of production, assuming that Solomon produces 2,500, 3,000, or 3,500 units
Solomon Corporation incurs the following annual fixed costs: Item Cost Depreciation $ 60,000 Officers' salaries 120,000 Long-term lease 95,000 Property taxes 7,000 Required Determine the total fixed cost per unit of production, assuming that Solomon produces 2,500, 3,000, or 3,500 units
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Solomon Corporation incurs the following annual fixed costs: Item Cost Depreciation $ 60,000 Officers' salaries 120,000 Long-term lease 95,000 Property taxes 7,000 Required Determine the total fixed cost per unit of production, assuming that Solomon produces 2,500, 3,000, or 3,500 units. (Round your answers to 2 decimal places.) 2,500 3,000 3.500 Units Produced Fixed cost per unit
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|
Units Produced |
2,500 |
3,000 |
3,500 |
|
Fixed cost per unit |
$112.80 |
$94 |
$80.57 |
Workings:
Total fixed cost = Depreciation + Officers’ salaries + Long-term lease + Property taxes
= $60,000 + $120,000 + $95,000 + $7,000
= $282,000
Fixed cost per unit at 2,500 units = $282,000 / 2,500 = $112.80
Fixed cost per unit at 3,000 units = $282,000 / 3,000 = $94
Fixed cost per unit at 3,500 units = $282,000 / 3,500 = $80.57
