Asked by Taylor Casbon on May 01, 2024
Verified
(Table: Costs of Birthday Cakes) Use Table: Costs of Birthday Cakes.Assume that fixed costs are $10.What is the average total cost of 2 cakes?
A) $35.00
B) $25.00
C) $17.50
D) $12.50
Average Total Cost
The cost per unit produced, calculated by dividing the overall production expenses by the total units produced.
Fixed Costs
Fixed Costs are expenses that do not vary with changes in production level or sales volume, such as rent, salaries, and equipment leases.
Birthday Cakes
Custom-decorated or pre-made cakes that are often a central dessert at birthday celebrations.
- Calculate the averages of total, variable, and fixed costs using the data provided.
Verified Answer
AVC for 2 cakes = ($20 + $30) / 2 = $25
Total cost for 2 cakes = $25 + $10 = $35
Average total cost for 2 cakes = $35 / 2 = $17.50.
Therefore, the best choice is C.
Learning Objectives
- Calculate the averages of total, variable, and fixed costs using the data provided.
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