Question

1. Calculate the fixed cost per unit at the various quantities (units)

Units	0	2,500	20,000	45,000	75,000	100,000
Fixed cost K’000	50	50	50	50	50	50
Fixed cost per unit

In view of the situation shown above what value of fixed cost per unit is used in costing a product?

Answer 1

Total Fixed costs are constant and do not change with change in number of units. As the number of units increases the fixed cost per unti decreases.

fixed cost per uni = Fixed costs/ number units

Units	0	2,500	20,000	45,000	75,000	100,000
Fixed cost K’000	50,000	50,000	50,000	50,000	50,000	50,000
Fixed cost per unit	- [as there are 0 units there cannot be any cost per unit]	$20[$50000/2500]	$2.5[50,000/20,000]	$1.11[$50,000/45,000]	$0.67[$50,000/75000]	$0.50[50,000/100,000]
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