Question

Best Birdies produces ornate birdcages. The company's average cost per unit is $22 when it produces 2500 birdcages. If $5900 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, his forecast for 3500 birdcages will be (Round intermediate calculations to the nearest cent and the final answer to the nearest dollar.)

Answer 1

Answer:

The managers predicted total costs for 3500 birdcages will be $74640.

Explanation:

Average cost = Total cost/Total units

total costs = (22*2500)

                 = $55000

variable costs = (55000 - 5900)

                       = $49100

variable cost/unit = (49100/2500)

                             = $19.64/unit

total cost for 3500 birdcages = 5900 + (19.64*3500)

                                                 = $74640

Therefore, The managers predicted total costs for 3500 birdcages will be $74640.