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A company incurs a total cost of $120,000 to produce 10,000 units. If fixed cost
A company incurs a total cost of $120,000 to produce 10,000 units. If fixed costs are $40,000, what is the marginal cost per unit?
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Practice Questions
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Q1
A company incurs a total cost of $120,000 to produce 10,000 units. If fixed costs are $40,000, what is the marginal cost per unit?
$8
$12
$10
$6
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Marginal cost = (Total cost - Fixed costs) / Number of units = ($120,000 - $40,000) / 10,000 = $8
Questions & Step-by-step Solutions
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Q
Q: A company incurs a total cost of $120,000 to produce 10,000 units. If fixed costs are $40,000, what is the marginal cost per unit?
Solution:
Marginal cost = (Total cost - Fixed costs) / Number of units = ($120,000 - $40,000) / 10,000 = $8
Steps: 7
Show Steps
Step 1: Identify the total cost, which is $120,000.
Step 2: Identify the fixed costs, which are $40,000.
Step 3: Calculate the variable costs by subtracting fixed costs from total costs: $120,000 - $40,000.
Step 4: Perform the subtraction: $120,000 - $40,000 = $80,000.
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: $80,000 / 10,000.
Step 7: Perform the division: $80,000 / 10,000 = $8.
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