Cost per unit


mir

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Just need to find the formula to calculate average cost per unit

supose a medical equipment is bought for 50,0000
variable cost 21,400 per year

Need to find out the price to charge to break even in 12 months
 
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bklynboy

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Need more information here to get a unit cost. We need to know the variable cost per unit. All we know is an upfront cost of 50K and annual variable cost of 21.4K - doesn't say how many units create the variable cost -
 
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As bklynboy noted, with the information given nothing much can be interpreted
 

mir

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suppose 500 units / test can be done in 12 months what price needs to be set to break even in 12 months
 
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bklynboy

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Variable cost per unit is 42.8 (21,400/500). Purchase price is 50,000. No information about fixed costs so I will assume 0? That means you sell 500 units a year and need to charge 142.8 (50,000+21,400 / 500) to break even.

This is not a real world example so I am not sure where you are going with it. Usually you do not expect to recover the cost of an asset in the first year and there are overhead fixed costs involved.
 
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