Asked by Paige Partin on Jul 02, 2024
Verified
A business incurs the following costs per unit: Labor $125/unit;Materials $45/unit and rent $250,000/month.If the firm produces 1,000,000 units a month,the total costs equal
A) $125,250,000
B) $170,250,000
C) $125,050,000
D) $170,050,000
Total Costs
The complete sum of all expenses incurred by a business in producing goods or services, including both fixed and variable costs.
Labor
Represents the human effort, both physical and mental, used in the production of goods and services.
Rent
The payment made for the use of a property, such as land, a building, or an apartment, typically on a monthly basis.
- Familiarize oneself with the assembly and estimation of aggregate expenditures for an enterprise.
Verified Answer
NM
Njabulo Magagula6 days ago
Final Answer :
B
Explanation :
The total costs equal the sum of variable costs (labor and materials per unit multiplied by the number of units) plus fixed costs (rent). Labor cost per unit is $125 and material cost per unit is $45, so the total variable cost per unit is $170. For 1,000,000 units, the total variable cost is $170 * 1,000,000 = $170,000,000. Adding the fixed cost of rent, $250,000, gives a total cost of $170,000,000 + $250,000 = $170,250,000.
Learning Objectives
- Familiarize oneself with the assembly and estimation of aggregate expenditures for an enterprise.