Question

When ajax co. produced 3 units of output per​ week, its total fixed cost was ​$100100 and total variable cost was ​$5555. when output increased to 4 units per​ week, total fixed cost remained at ​$100100 and total variable cost increased to ​$7575?

Answer 1

A fixed cost of $100,100 will not change. At 3 units per output at $5555 the cost per unit would be 5555 divided by 3 which equals 1851.66 per unit. When increased to 4 Units per week the Fixed cost will remain the same the variable cost should be 4 times 1851.66 per unit which would equal $7406.66. So we can either conclude that the variable cost increases per unit or that the question is false!