Question

The per-unit cost of an item is its average total cost (= total cost/quantity). suppose that a new cell phone application costs $250,000 to develop and only $0.70 per unit to deliver to each cell phone customer. instructions: round your answers to 2 decimal places.
a. what will be the per-unit cost of the application if it sells 100 units?
b. what will be the per-unit cost of the application if it sells 1,000 units?
c. what will be the per-unit cost of the application if it sells 1 million units?

Answer 1

The per-unit cost of an item is its average total cost = (total cost/quantity). suppose that a new cell phone application costs $250,000 to develop and only $0.70 per unit to deliver to each cell phone customer. instructions: round your answers to 2 decimal places.

Total to develop = $250,000
Total per unit = $0.70

a. what will be the per-unit cost of the application if it sells 100 units?
If we are solving for 100 units first, take (0.70)(100) = $70, then we need to add the $70 to the cost of development which would make it $250,070
Finally ($257,070/100) = $2,500.70

b. what will be the per-unit cost of the application if it sells 1,000 units?
If we are solving for 1000 units first, take (0.70)(1000) = $700, then we need to add the $700 to the cost of development which would make it $250,700
Finally ($257,700/1000) = $257.70

c. what will be the per-unit cost of the application if it sells 1 million units?
If we are solving for 100 units first, take (0.70)(1,000,000) = $700,000, then we need to add the $700,000 to the cost of development which would make it $950,000. 
Finally ($950,000/1,000,000) = $0.95