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 : Option C. Increase to $ 20.25 per unit

Total Fixed cost expense does not change with change in production. In simple terms, Total fixed cost remains same irrespective of production level.

Fixed cost per unit is absorbed in nature thus Fixed cost per unit is change with change in production due to total total cost remains constant.

In this case, Fixed cost per unit $ 18.00 at 27,000 units.

Thus total fixed cost is $ 486,000 ( 27,000 * $ 18.00)

As we know, Total fixed cost remains unchanged with change in production.

This at 24,000 units of production total fixed cost will be same i.e $ 486,000

Thus, Fixed cost per unit at 24,000 units = total fixed cost / Production level

= $ 486,000 / 24,000

= $ 20.25

Thus, fixed cost per unit at 24,000 units is $ 20.25.

Answer 2

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