APPLY THE CONCEPTS: Determine the total fixed cost Costs that are not tied to changes in production level across the relevant range are known as "fixed costs." These costs are indirectly assigned to units of production, and many factory overhead costs fall into this category. The business must ensure that all costs are assigned to the product. By assigning fixed costs, business costs are not directly tied to any one unit of production. This is important because it affects both pricing and profits. A machine on the production line at an auto company requires a periodic retooling that costs $150,000 annually. Calculate the total fixed cost per unit at different levels along the relevant range of 100,000 to 400,000 units. If required, round the per unit amounts to two decimal places Number of Units Produced Fixed Cost per unit 100,000 200,000 300,000 400,000 Characteristics of Fixed Costs 1. Fixed cost per unit changes directly the activity base across the relevant range 2. Total fixed cost changes with the activity base across the relevant range