Chaz Denver Company has identified that the cost of a new computer will be $40,000, but with the use of the new computer, net in
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Answer:
D. None of the above.
Explanation:
When there's a change in demand, the demand curve shifts and only quantity demanded changes- it either increases or reduces but price doesn't change. A change in demand is caused by factors that affect a consumer's demand for a good other than the price of the commodity.
Some of the factors that cause a change in demand include:
1. Change in income
2. Change in taste
3. Season
When there's a change in supply, the supply curve shifts and quantity supplied changes but there's no change in price. Change in supply is caused by other factors that affect supply other than price.
Answer:
1) The total cost of production (TC) is $32,802.
2) The variable cost per unit is $9/unit.
3) Cost equation:
4) TC=$35,145
5) TC=$33,702
6) Difference=$1,443
The appropiate approach is using the cost function, because its differentiates the cost that are fixed and not dependant of the volume of production, and the variable cost, that are proportional to the quantity produced.
Explanation:
1) The total cost of production can be calculated as the product of the cost per unit ($23.43/unit) and the total ammount of units (1,400 units):
The total cost of production (TC) is $32,802.
2) The fixed cost (FC) are $20,202, so the variable cost are:
This is the variable cost for 1,400 mailboxes, so the unit variable cost is:
The variable cost per unit is $9/unit.
3) The equation of cost can be written as:
4) If it uses the average cost tot predict the cost of 1,500 mailboxes, he will get:
5) If he uses the cost function, he will get
6) The dollar difference between the two estimates is:
The appropiate approach is using the cost function, because its differentiates the cost that are fixed and not dependant of the volume of production, and the variable cost, that are proportional to the quantity produced.
The average cost per unit is not constant for every quantity and the error will increase if the quantity is much different from 1,300 units.