La Yuca Company produces raw materials for the alcapurrias industry. It has weekly fixed costs of...

La Yuca Company produces raw materials for the alcapurrias industry. It has weekly fixed costs of $ 4,000.00 plus variable costs per unit of $ 3.00. The raw material is sold in the market for $ 20.00 per package.

a) determine the total cost to produce # 2,000 packages

b) determine the cost per unit, average cost, for the # 2,000 packages

c) How much can you lower the fixed cost if you want to make a profit of $ 3,000.00 per week?

Expert Solution

Q1) (a) Total cost = fixed cost + variable cost*quantity

= 4000 + 3*2000 = 4000 + 6000 = 10000

(b)Average cost = Cost per unit = total cost/ total units = 10000/2000 = 5

(c) total profit = total revenue - total cost

=> 3000 = 30*2000 - fixed cost - 3*2000

=> 3000 = 60000 - 6000 - fixed cost

=> fixed cost = 51000

Rahul Sunny answered 2 years ago

"La Yuca" company produces raw material for the alcapurrias industry. It has fixed weekly costs of $ 4,000.00 plus variable costs per unit of $ 3.00. The raw material is sold in the market for $ 20.00 per package.

"La Yuca" company produces raw material for the alcapurrias industry. It has fixed weekly costs of $ 4,000.00 plus variable costs per unit of $ 3.00. The raw material is sold in the market for $ 20.00 per package. a) determine the total cost to produce # 2,000 packages b) determine the cost per unit, average cost, for the # 2,000 packages c) How much can the fixed cost go down if you want to make a profit of $ 3,000.00 per week?

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