Final answer:
The average cost to produce one unit is $20.00 for Connor Company. This was calculated by summing up the direct materials, wages for production workers, and lease payments, and dividing this total by the number of units produced.
Step-by-step explanation:
To calculate the average cost to produce one unit, we need to consider all production costs but exclude general, selling, and administrative expenses, as those are not part of the production cost. So, we sum up the direct materials, wages for production workers, lease payments, and utilities to determine the total production cost:
- Direct materials: $50,000
- Wages for production workers: $36,000
- Lease payments and utilities: $14,000
Adding these figures, we get a total production cost of $50,000 + $36,000 + $14,000 = $100,000.
Connor Company produced 5,000 units in its first year. Now, we divide the total production cost by the number of units produced to find the average cost per unit:
Average cost per unit = Total production cost / Number of units produced
Average cost per unit = $100,000 / 5,000 units = $20.00 per unit
Therefore, the average cost to produce one unit is $20.00, which corresponds to option (a).