Rooney Corporation incurs the following annual fixed costs:
| Item | Cost | ||
| Depreciation | $ | 56,000 | |
| Officers’ salaries | 120,000 | ||
| Long-term lease | 60,000 | ||
| Property taxes | 9,000 | ||
Required
Determine the total fixed cost per unit of production, assuming that Rooney produces 8,000, 8,500, or 9,000 units. (Round your answers to 2 decimal places.)
Explanation
Total Fixed Cost:
| Item | Cost | ||
| Depreciation | $ | 56,000 | |
| Officers’ salaries | 120,000 | ||
| Long-term lease | 60,000 | ||
| Property taxes | 9,000 | ||
| Total fixed costs | $ | 245,000 | |
| Units Produced (a) | 8,000 | 8,500 | 9,000 | ||||||
| Total fixed cost (b) | $ | 245,000 | $ | 245,000 | $ | 245,000 | |||
| Fixed cost per unit (b ÷ a) | $ | 30.63 | $ | 28.82 | $ | 27.22 | |||
