Question

I�MaPizzaCO. Produces and sells specialty pizzas. Last year, it produced 8,000 mushroom, sausage and spinach pizzas and sold each one for $8. To produce these 8,000 specialty pizzas, the company incurred variable cost of $24,000 and a total cost of $40,000. I�MaPizzaCO�s average fixed cost to produce 8,000specialty pizza was?2.001.803.001.60

Answer 1

Answer:

Average fixed cost to produce 8,000 specialty pizza was $2

Explanation:

The computation of the average fixed cost is shown below:

Average fixed cost = (Total fixed cost) ÷ (number of pizzas produced)

where,

Total fixed cost = Total cost - variable cost

                          = $40,000 - $24,000

                          =  $16,000

And, the number of pizzas produced is 8,000

Now put these values to the above formula

So, the value would equal to

= $16,000 ÷ 8,000

= $2