Asked by Delaney DeAvila on Jul 07, 2024
Verified
(Table: Cakes) Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 1 mixer and bakes 100 cakes per day,what is her average total cost?
A) $1,010
B) $20
C) $15
D) $10
Average Total Cost
A financial metric that represents the total cost of production (fixed and variable costs) divided by the total quantity of output produced, indicating the cost per unit of output.
Mixers
Devices or software used for blending or merging audio or other elements together; also refers to non-alcoholic beverages mixed with alcohol in drinks.
- Investigate and compute average fixed, variable, and overall charges.
- Examine the influence of manufacturing quantities on cost indicators.
Verified Answer
RG
Rhiãã GëëJul 09, 2024
Final Answer :
B
Explanation :
The average total cost (ATC) is calculated by adding the average fixed cost (AFC) and the average variable cost (AVC) and then dividing by the quantity of output. If the table provided shows that with 1 mixer, the fixed cost is $1,000 and the average variable cost is $10 per cake, then for 100 cakes: ATC = (Fixed Costs + (Variable Cost per Cake * Quantity)) / Quantity = ($1,000 + ($10 * 100)) / 100 = ($1,000 + $1,000) / 100 = $2,000 / 100 = $20.
Learning Objectives
- Investigate and compute average fixed, variable, and overall charges.
- Examine the influence of manufacturing quantities on cost indicators.