Question

Sea Side Enterprises is trying to predict the cost associated with producing its anchors. At a production level of 5100 anchors, Sea Side Enterprises' average cost per anchor is $52 If $18,000 of the total costs are fixed, what is the variable cost of producing each anchor

Answer 1

Answer:

$48.47

Explanation:

Data given in the question

Number of Anchors produced = 5,100

Average cost per anchor = $52

Fixed cost = $18,000

As we know that

Total cost = Fixed cost + variable cost

where,

Total cost is

= 5,100 anchors × $52

= $265,200

And, the fixed cost is $18,000

So, the variable cost is

= $265,200 - $18,000

= $247,200

And, the number of anchors is produced is 5,100

So, the variable cost for each anchor is

= $247,200 ÷ 5,100

= $48.47