A company has fixed costs of $50,000 and variable costs of $20 per unit. If they

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Question: A company has fixed costs of $50,000 and variable costs of $20 per unit. If they sell 3,000 units, what is the total cost?

Options:

Correct Answer: $110,000

Solution:

Total Cost = Fixed Costs + (Variable Cost per Unit * Number of Units) = $50,000 + ($20 * 3,000) = $50,000 + $60,000 = $110,000.

A company has fixed costs of $50,000 and variable costs of $20 per unit. If they sell 3,000 units, what is the total cost?

A company has fixed costs of $50,000 and variable costs of $20 per unit. If they sell 3,000 units, what is the total cost?

Step 1: Identify the fixed costs. The fixed costs are $50,000.
Step 2: Identify the variable cost per unit. The variable cost per unit is $20.
Step 3: Identify the number of units sold. The number of units sold is 3,000.
Step 4: Calculate the total variable costs by multiplying the variable cost per unit by the number of units sold. This is $20 * 3,000.
Step 5: Perform the multiplication: $20 * 3,000 = $60,000.
Step 6: Add the total variable costs to the fixed costs to find the total cost. This is $50,000 + $60,000.
Step 7: Perform the addition: $50,000 + $60,000 = $110,000.
Step 8: The total cost is $110,000.

Total Cost Calculation – Understanding how to calculate total costs by combining fixed and variable costs.
Fixed vs Variable Costs – Differentiating between fixed costs that do not change with production levels and variable costs that do.