Hadrana corporation reports that at an activity level of 5,500 units, its total variable cost is $275,330 and its total fixed cost is $86,240. what would be the average fixed cost per unit at an activity level of 5,600 units? assume that this level of activity is within the relevant range.

Question

Allyson Booker

Business

2 June, 06:33

Hadrana corporation reports that at an activity level of 5,500 units, its total variable cost is $275,330 and its total fixed cost is $86,240. what would be the average fixed cost per unit at an activity level of 5,600 units? assume that this level of activity is within the relevant range.

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Kevin Hines · Answer 1

Calculation of average fixed cost per unit at an activity level of 5,600 units:

The average fixed cost per unit can be calculated using the following formula:

Average Fixed cost Per unit = Total Fixed Cost / Number of Units

Total Fixed Cost at the level of 5,600 units is given $86,240

Hence, Average Fixed cost Per unit = 86240/5600 = $15.40

So, the average fixed cost per unit at an activity level of 5,600 units is $15.40