Question

Baird Corporation incurs the following annual fixed costs:

Item	Cost
Depreciation	$	52,000
Officers’ salaries		180,000
Long-term lease		65,000
Property taxes		5,000

Required

Determine the total fixed cost per unit of production, assuming that Baird produces 7,500, 8,000, or 8,500 units. (Round your answers to 2 decimal places.)

Answer 1

Ans.	Step 1 : Calculations of Total fixed cost:
	Item	Cost
	Depreciation	$52,000
	Office salaries	$180,000
	Long term lease	$65,000
	Property taxes	$5,000
	Total fixed cost	$302,000
	Step 2 : Calculations of Total fixed cost per unit:
	Fixed cost per unit = Total fixed cost / Production units
	Total fixed cost (a)	Production Units (b)	Fixed cost per unit (a / b)
	$302,000	7500	$40.27
	$302,000	8000	$37.75
	$302,000	8500	$35.53