If a company has fixed costs of $5,000 and variable costs of $15 per unit, what

₹0.0

Question: If a company has fixed costs of $5,000 and variable costs of $15 per unit, what is the total cost for producing 200 units?

Options:

Correct Answer: $10,500

Solution:

Total cost = Fixed costs + (Variable cost per unit * Number of units) = $5,000 + ($15 * 200) = $5,000 + $3,000 = $8,000.

If a company has fixed costs of $5,000 and variable costs of $15 per unit, what is the total cost for producing 200 units?

If a company has fixed costs of $5,000 and variable costs of $15 per unit, what is the total cost for producing 200 units?

Step 1: Identify the fixed costs. In this case, the fixed costs are $5,000.
Step 2: Identify the variable cost per unit. Here, the variable cost per unit is $15.
Step 3: Determine the number of units produced. The company is producing 200 units.
Step 4: Calculate the total variable costs by multiplying the variable cost per unit by the number of units: $15 * 200 = $3,000.
Step 5: Add the fixed costs to the total variable costs to find the total cost: $5,000 + $3,000 = $8,000.

Fixed Costs – Costs that do not change with the level of production, such as rent or salaries.
Variable Costs – Costs that vary directly with the level of production, such as materials or labor per unit.
Total Cost Calculation – The sum of fixed costs and total variable costs for a given level of production.