Asked by Paola Zaragoza on Jul 09, 2024

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(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 2 mixers and bakes 200 cakes per day,what is her average total cost?

A) $8
B) $14.50
C) $1,492
D) $1,508

Mixers

Devices used for blending ingredients together, commonly found in cooking, baking, and cocktail making.

  • Examine and compute the mean fixed, variable, and aggregate expenses.
  • Understand the impact of production volumes on cost metrics.
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FA
fatima alkadriJul 11, 2024
Final Answer :
B
Explanation :
According to the table, if Pat purchases 2 mixers, her estimated fixed cost is $90 per day and her average variable cost is $0.85 per cake. Therefore, her total cost for baking 200 cakes per day would be:

Total cost = Fixed cost + (Average variable cost x Quantity)
Total cost = $90 + ($0.85 x 200)
Total cost = $90 + $170
Total cost = $260

Average total cost is calculated by dividing total cost by quantity:

Average total cost = Total cost ÷ Quantity
Average total cost = $260 ÷ 200
Average total cost = $1.30 per cake

Therefore, the best choice for Pat is to purchase 2 mixers, as it has the lowest average total cost of $1.30 per cake.