Question

​Plowin' Supply plans to make 15000 tractors at its plant. Fixed costs are $ 540000 and variable costs are $ 200 per tractor. What is the average cost per​ tractor?

Answer 1

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