Answer:
Total cost= $75,315
Explanation:
Giving the following information:
The company's average cost per unit is $22 when it produces 2700 birdcages.
Fixed cost= $5700
We need to calculate the total cost for 3,500 birdcages.
<u>First, we need to calculate the unitary cost per unit:</u>
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The average cost is calculated as follow:
Average cost= total cost/ number of units
22= total cost/2,700
Total cost= 59,400
If fixed costs are $5,700, total and unitary variable costs are:
Total variable cost= 59,400 - 5,700= 53,700
Unitary variable cost= 53,700/2,700= $19.89 per unit
<u>Now, we can determine the function cost:</u>
Total cost= fixed cost + variable cost
Total cost= 5,700 + 19.89*x
For 3,500 units:
Total cost= 5.700 + 19.89*3,500
Total cost= $75,315
