1. **State the problem:** We are given average costs at two activity levels and need to find variable cost per unit, total fixed cost, total expected costs at 18,000 units, and total contribution margin at 18,000 units. 2. **Formulas and rules:** - Average cost per unit = Total cost / Number of units - Total cost = Fixed cost + (Variable cost per unit \times Number of units) - Contribution margin per unit = Selling price - Variable cost per unit 3. **Calculate variable cost per unit:** Let $V$ = variable cost per unit, $F$ = total fixed cost. From the two points: $$1.425 = \frac{F + V \times 16000}{16000} = \frac{F}{16000} + V$$ $$1.38 = \frac{F + V \times 20000}{20000} = \frac{F}{20000} + V$$ Subtract second from first: $$1.425 - 1.38 = \frac{F}{16000} - \frac{F}{20000}$$ $$0.045 = F \left(\frac{1}{16000} - \frac{1}{20000}\right)$$ Calculate difference in fractions: $$\frac{1}{16000} - \frac{1}{20000} = \frac{20000 - 16000}{16000 \times 20000} = \frac{4000}{320000000} = \frac{1}{80000}$$ So: $$0.045 = \frac{F}{80000} \Rightarrow F = 0.045 \times 80000 = 3600$$ 4. **Find variable cost per unit $V$:** Use first equation: $$1.425 = \frac{3600}{16000} + V = 0.225 + V \Rightarrow V = 1.425 - 0.225 = 1.2$$ 5. **Calculate total expected costs at 18,000 units:** $$\text{Total cost} = F + V \times 18000 = 3600 + 1.2 \times 18000 = 3600 + 21600 = 25200$$ 6. **Calculate total contribution margin at 18,000 units:** Selling price per unit = 3.00 Contribution margin per unit = $3.00 - 1.2 = 1.8$ Total contribution margin: $$1.8 \times 18000 = 32400$$ **Final answers:** - Variable cost per unit = $1.2$ - Total fixed cost = $3600$ - Total expected costs at 18,000 units = $25200$ - Total contribution margin at 18,000 units = $32400$