Asked by Massiel Toribio Peralta on May 05, 2024
Verified
The Sunshine Corporation finds that its costs are $40 when it produces no output.Its total variable costs (TVC) change with output as shown in the accompanying table.Use this information to answer the following question. Output TVC 1$302503654855110\begin{array} { c c c } \text { Output } & & \text { TVC } \\\hline1 & & \$ 30 \\2 & & 50 \\3 & & 65 \\4 & & 85 \\5 & & 110\end{array} Output 12345 TVC $30506585110 Refer to the information.The average total cost of 3 units of output is:
A) $65.
B) $21.67.
C) $40.
D) $35.
Average Total Cost
The total cost of production divided by the number of units produced, encompassing both fixed and variable costs.
Total Variable Costs
The sum of expenses that vary directly with the level of production or sales volume.
- Discover and calculate the complete costs, fixed costs per unit, variable costs per unit, and extra costs utilizing the available data.
Verified Answer
MM
Michael MurrayMay 09, 2024
Final Answer :
D
Explanation :
To find the average total cost (ATC), we need to add up the total costs (fixed and variable) and divide by the number of units produced.
The total cost (TC) for 3 units of output can be calculated by adding the TVC for 3 units to the fixed cost:
TC = TVC + FC
TC = 65 + 40 = 105
So, the ATC for 3 units of output is:
ATC = TC / Output
ATC = 105 / 3 = $35
Therefore, the correct answer is D.
The total cost (TC) for 3 units of output can be calculated by adding the TVC for 3 units to the fixed cost:
TC = TVC + FC
TC = 65 + 40 = 105
So, the ATC for 3 units of output is:
ATC = TC / Output
ATC = 105 / 3 = $35
Therefore, the correct answer is D.
Learning Objectives
- Discover and calculate the complete costs, fixed costs per unit, variable costs per unit, and extra costs utilizing the available data.