Question

4 Advantage, Inc., a tennis equipment manufacturer, has variable costs of $0.60 per unit of product. In August, the volume of production was 27,000 units, and units sold were 21,800. The total production costs incurred were $30,600. What are the fixed costs per month?

Answer 1

Answer: the fixed costs per month is $14400

Step-by-step explanation:

Total cost = fixed cost + variable cost.

The tennis equipment manufacturer, has variable costs of $0.60 per unit of product. In August, the volume of production was 27,000 units. This means that the total variable cost from producing 27000 units is

27000 × 0.6 = 16200

If the total production costs incurred were $30,600, then the fixed costs per month would be

30600 = fixed cost + 16200

Fixed cost = 30600 - 16200

Fixed cost = $14400

Answer 2

Answer:

$14,400

Step-by-step explanation:

Total number of units produced in August = 27000

Variable costs per unit of the product = $0.60

Let the fixed cost be represented by F.

Then Total production cost for August = F + 0.6 * 27000

But the total production cost is given as $30600

$\[F+0.6*27000=30600\]$

$\[=> F+16200=30600\]$

$\[=> F=30600-16200\]$

$\[=> F=14400\]$

Hence, total fixed costs per month is $14400