Asked by Gildardo Ramos on Jul 11, 2024
Verified
The Blue Ridge Furniture Factory has fixed costs of $10 million and variable costs of $5 million.If it turns out 1 million chairs a year,how much is the average total cost of producing one chair?
Variable Costs
Costs that change in proportion to the level of activity or volume of output in production.
Fixed Costs
Business expenses that remain constant regardless of the level of production or sales, such as rent or salaries.
Average Total Cost
The total cost divided by the number of units produced, calculating the cost to produce an average unit of output.
- Acquire knowledge about the nature of fixed and variable expenditures and their consequences for short-term and long-term strategic choices.
- Analyze the provided data to find the average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC).
Verified Answer
SC
Learning Objectives
- Acquire knowledge about the nature of fixed and variable expenditures and their consequences for short-term and long-term strategic choices.
- Analyze the provided data to find the average fixed cost (AFC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC).