Asked by Justin Landry on Sep 23, 2024
Verified
A firm produces 500 units per week.It hires 20 full-time workers (40 hours/week) at an hourly wage of $15.Raw materials are ordered weekly and they costs $10 for every unit produced. The weekly cost of the rent payment for the factory is $2,250.How do the overall costs breakdown?
A) total variable cost is $17,000;total fixed cost is $2,250;total cost is $19,250
B) total variable cost is $12,000;total fixed cost is $7,250;total cost is $19,250
C) total variable cost is $5,000;total fixed cost is $14,250;total cost is $19.250
D) total variable cost is $5,000;total fixed cost is $2,250;total cost is $7,250
Total Variable Cost
The sum of all costs that vary directly with the level of production or output, such as materials and labor.
Total Fixed Cost
the sum of all costs that remain constant regardless of the level of production or business activity.
Weekly Cost
Expenses calculated on a weekly basis, tracking the regular outflow of cash for operations or living expenses.
- Comprehend the definition and calculation of total costs (TC), including the distinction between fixed costs (FC) and variable costs (VC).
- Acquire knowledge on the characteristics of variable, fixed, and total costs within the short run and their effects on production decision-making.
Verified Answer
BV
Brian Villa3 days ago
Final Answer :
A
Explanation :
Variable costs include wages and raw materials. Wages are 20 workers * 40 hours/week * $15/hour = $12,000. Raw materials are $10/unit * 500 units = $5,000. So, total variable cost = $12,000 + $5,000 = $17,000. Fixed cost is the rent payment of $2,250. Total cost = variable cost + fixed cost = $17,000 + $2,250 = $19,250.
Learning Objectives
- Comprehend the definition and calculation of total costs (TC), including the distinction between fixed costs (FC) and variable costs (VC).
- Acquire knowledge on the characteristics of variable, fixed, and total costs within the short run and their effects on production decision-making.