Answer:
Total cost= $75,315
Explanation:
Giving the following information:
The company's average cost per unit is $22 when it produces 2700 birdcages.
Fixed cost= $5700
We need to calculate the total cost for 3,500 birdcages.
First, we need to calculate the unitary cost per unit:
The average cost is calculated as follow:
Average cost= total cost/ number of units
22= total cost/2,700
Total cost= 59,400
If fixed costs are $5,700, total and unitary variable costs are:
Total variable cost= 59,400 - 5,700= 53,700
Unitary variable cost= 53,700/2,700= $19.89 per unit
Now, we can determine the function cost:
Total cost= fixed cost + variable cost
Total cost= 5,700 + 19.89*x
For 3,500 units:
Total cost= 5.700 + 19.89*3,500
Total cost= $75,315
Answer: $75,315
Explanation:
Given the following ;
Average cost per unit = $22,when Total unit = 2700
Fixed cost(FC) = $5700
Variable Cost(VC)
In other to use the cost function in determining the total cost of 3500 unit, we need to determine the following ;
Total Cost{TC) of 2700 units :
unit size × average price per unit
2700 × $22 = $59,400
TC = $59,400
Cost equation :
TC = VC(unit size) + FC
$59,400 = VC(2700) + $5700
VC = $53,700 ÷ 2700
Variable Cost(VC) per unit = $19.89
Using the cost function ;
We can project the fixed cost when unit size = 3500
TC = VC(unit size) + FC
TC = $19.89(3500) + $5700
FC = $ 696615 + $5700
FC = $75,315
