8 June, 07:11

# During its first year of operations, Connor Company paid \$46,750 for direct materials and \$19,500 in wages for production workers. Lease payments and utilities on the production facilities amounted to \$8,500. General, selling, and administrative expenses were \$9,500. The company produced 6,500 units and sold 5,500 units for \$16.50 a unit. The average cost to produce one unit is which of the following amounts? a. \$11.69b. \$10.10c. \$8.15d. \$12.56

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1. 8 June, 07:28
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The average cost to produce one unit is \$11.5

Explanation:

Total costs to produce 6,500 units of the company are calculated by following formula:

Total costs = Direct materials cost + Labor cost + Lease payments and utilities on the production facilities = \$46,750 + \$19,500 + \$8,500 = \$74,750

The company produced 6,500 units. The average cost to produce one unit = Total costs/6,500 = \$74,750/6.500 = \$11.5

Note: General, selling, and administrative expenses are not the cost to produce the product.