When 27,000 units are produced, fixed costs are $18.00 per unit. Therefore, when 24,000 units are...

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Answer 1

Answer #1

Answer is (c) increase to $20.25 per unit.

Total fixed costs = 27,000 units * $18.00 per unit = $486,000.

Total fixed costs remain same irrespective of level of activity.

Therefore, when 24,000 units are produced, total fixed cost will remain same i.e. $486,000.

Fixed cost per unit = $486,000 / 24,000 units = $20.25 per unit.

We can say that when number of units produced are decreased fixed cost per unit is increased.

I hope I've explained to the point. Please feel free to ask any queries and do give a thumbsup if the solution was satisfactory. Thankyou.

Answer 2

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