Question

A firm sells 2000 units at £500 each. If fixed costs are £50,000 and variable costs are £100 per unit, calculate the total costs

Answer 1

Answer: £ 250,000

Explanation:

Given: Fixed costs = £50,000

Number of units=2000

Variable cost per unit = £100

Since Total variable cost = (Number of units) x (Variable cost per unit)

=2000 x ( £100)

=  £200,000

We know that,

Total cost = Total fixed cost +Total Variable cost

= £ (50,000 + 200,000)

= £ 250,000

Hence,  the total costs =  £ 250,000