Answer:
The average cost per tractor is $236
Explanation:
The average cost is calculated by dividing the sum of variable costs and fixed costs by the quantity of units produced.
Average cost per unit = Total cost of production/Quantity of units produced
Plowin' Supply plans to make 15,000 tractors with fixed costs are $ 540,000 and variable costs are $200 per tractor.
Total variable costs = 15,000 x $200 = $3,000,000
Total cost = Total variable costs + Fixed costs = $3,000,000 + $540,000 = $3,540,000
Average cost per tractor = $3,540,000/15,000 = $236
