Question

The RideEm Bicycles factory can produce 110 bicycles in a day at a total cost of $10,900 and it can produce 130 bicycles in a day at a total cost of $11,600. What are the company's daily fixed costs?
What is the marginal cost per bicycle?

Answer 1

C - fixed costs; b - costs per bicycle;
c + 110 b = 10,900 
c + 130 b = 11,600
c = 10,900 - 110 b
10,900 - 110 b + 130 b = 11,600
20 b = 700
b = 700 : 20 = $35
c + 110 * 35 = 10,900
c + 3,850 = 10,900
c = 10,900 - 3,850
c = $7,050 ( daily fixed costs )
Marginal cost is the cost of producing one more unit of goods ( one more bicycle ).
Answer:
The company`s daily fixed cost is $7,050.
The marginal cost per bicycle is $35.