Asked by Emaree Reeves on Jul 30, 2024
Verified
Austin's total fixed cost is $3,600 a month for making 100,000 cupcakes at his cupcake bakery.Austin employs 20 workers and pays each worker $600 a month.If labor is his only variable cost,what is Austin's total cost per month for making 100,000 cupcakes?
A) $3,600
B) $1,200
C) $15,600
D) $12,000
Total Fixed Cost
The sum of all costs that do not change with the level of output, such as rent, salaries, and loan payments.
Cupcake Bakery
A specialized bakery that focuses on baking and selling a variety of cupcakes.
Variable Cost
Costs that change in proportion to the level of goods or services produced by a business.
- Master the distinctions between variable, fixed, and total costs within production settings.
- Derive the average fixed, variable, global, and marginal expenses.
- Determine yearly expenses through the evaluation of operational durations and production rates.
Verified Answer
JP
Jason PatronikJul 31, 2024
Final Answer :
C
Explanation :
- Austin's fixed cost is $3,600.
- The variable cost is the labor cost. He employs 20 workers and pays each worker $600 a month, so his total labor cost is $12,000 a month.
- Adding the fixed cost and variable cost, his total cost per month is $15,600 for making 100,000 cupcakes.
- The variable cost is the labor cost. He employs 20 workers and pays each worker $600 a month, so his total labor cost is $12,000 a month.
- Adding the fixed cost and variable cost, his total cost per month is $15,600 for making 100,000 cupcakes.
Learning Objectives
- Master the distinctions between variable, fixed, and total costs within production settings.
- Derive the average fixed, variable, global, and marginal expenses.
- Determine yearly expenses through the evaluation of operational durations and production rates.