Question

1))Suppose that a factory is producing two automobiles per hour. The total fixed cost is $20,000. The total variable cost is $10,000. The average total cost is ______________.

2)) The fixed cost of producing surfboards is $5,000 per month. The total variable cost of producing 15 surfboards is $36,000 per month. The average total cost of producing 15 surfboards in a month is ______.

A)$333.33

B)$2,733.33

C)$2,400.00

D)$41,000.00

Answer 1

Q1. Answer is The average total cost is $15,000

The explanation is as follows:

Total fixed cost: $ 20,000

Total variable cost: $ 10,000

Total cost of producing 2 automobiles: $ 30,000

Therfore, Average Total cost for roducing each automobile: $30,000 /2 numbers = $ 15,000 per automobile.

Q2. Answer is B. $2733.33

The explanation is as follows:

Total variable cost for 15 surfboards:         $36,000

Add: Fixed cost:                                         $5,000

Total cost of 15 surfboards:                        $41,000

Number of surfboards:                                15 numbers

Therefore, Average total cost = Total cost / Number of units = $ 41,000 /15 numbers = $ 2733.33