Question

2. The table below shows the cost data of a furniture manufacturer named Cindy’s Custom Made.

a) Complete the table, assuming that labour and materials cost $12 an hour. For all amounts, round your answers to the nearest whole number.

Output of Chairs

Total Hours

Average Hours per Chair

Marginal Hours per Chair

TVC($)

AVC($)

TFC($)

TC($)

ATC($)

MC($)

1	4	Answer	Answer	Answer	Answer	180	Answer	Answer	Answer
2	6	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
3	12	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
4	20	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
5	30	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer
6	48	Answer	Answer	Answer	Answer	Answer	Answer	Answer	Answer

Answer 1

We know that total fixed cost remains same for all levels of output, so, it will be $180 for all the output levels. It is given that  labour and materials cost $12 an hour, so, we can calculate the total variable cost by multiplying the total hours given for a specific level of output with the cost given for per hour.

Total Cost is the sum total of total fixed cost & total variable cost.

To calculate average variable cost, average total cost & marginal cost, we will use below mentioned formulas:

Output of Chairs	Total hours	Average hours per chair	Marginal hours per chair	TVC ($)	AVC($)	TFC ($)	TC ($)	ATC ($)	MC ($)
1	4	4	-	48	48	180	228	228	-
2	6	3	2	72	36	180	252	126	24
3	12	4	6	144	48	180	324	108	72
4	20	5	8	240	60	180	420	105	96
5	30	6	10	360	72	180	540	108	120
6	48	8	18	576	96	180	756	126	216