Question

Question: Determining fixed cost per unit

For each total fixed cost listed below, determine the fixed cost per unit when sales are 50, 100, and 200 units.

Store rent $ 5,000

Manager’s salary 3,000

Equipment lease 500

Depreciation on fixtures 250

Short answer

Answer

The fixed cost per unit for 50 units is $175 per unit, for 100 units is $87.5, for 200 units is $43.75

Step-by-step solution

Calculation of total fixed cost

Particulars	Amount
Store rent	$5000
Manager’s salary	$3000
Equipment lease	$500
Depreciation on fixtures	$250
Total fixed cost	$8,750

Calculation of fixed cost per unit           

	50	100	200
Total fixed cost	$8,750	$8,750	$8,750
÷ No. of units sold	50	100	20
Fixed cost per unit	$175	$87.5	$43.75