A company produces 10,000 units of a product at a total cost of $50,000. If the

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Question: A company produces 10,000 units of a product at a total cost of $50,000. If the fixed costs are $20,000, what is the marginal cost per unit?

Options:

$3.00
$5.00
$2.00
$4.00

Correct Answer: $3.00

Solution:

Marginal cost = (Total cost - Fixed costs) / Number of units = ($50,000 - $20,000) / 10,000 = $3.00

A company produces 10,000 units of a product at a total cost of $50,000. If the

Practice Questions

A company produces 10,000 units of a product at a total cost of $50,000. If the fixed costs are $20,000, what is the marginal cost per unit?

$3.00
$5.00
$2.00
$4.00

Questions & Step-by-Step Solutions

A company produces 10,000 units of a product at a total cost of $50,000. If the fixed costs are $20,000, what is the marginal cost per unit?

Step 1: Identify the total cost of producing the product, which is $50,000.
Step 2: Identify the fixed costs, which are $20,000.
Step 3: Calculate the variable costs by subtracting fixed costs from total costs: $50,000 - $20,000.
Step 4: The result of the subtraction is the variable costs, which is $30,000.
Step 5: Identify the number of units produced, which is 10,000.
Step 6: Calculate the marginal cost per unit by dividing the variable costs by the number of units: $30,000 / 10,000.
Step 7: The result of the division is the marginal cost per unit, which is $3.00.

Marginal Cost Calculation – Marginal cost is calculated by subtracting fixed costs from total costs and dividing by the number of units produced.
Fixed vs. Variable Costs – Understanding the distinction between fixed costs (which do not change with production volume) and variable costs (which do).

A company produces 10,000 units of a product at a total cost of $50,000. If the

What’s inside this PDF?

A company produces 10,000 units of a product at a total cost of $50,000. If the

Practice Questions

Questions & Step-by-Step Solutions

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