Suppose That a Donut Bakery Has $1,500 of Variable Costs

question 80

Multiple Choice

Suppose that a donut bakery has $1,500 of variable costs and $2,500 of fixed costs when it produces 1000 donuts and sells them for $1 per donut.Average total cost is equal to:

• A)$4.
• B)$25.
• C)$2.
• D)$1.5.

---

Definitions:

Value-based Pricing

A pricing strategy where the price is based on the perceived value of a product or service to the customer rather than on the cost of production or historical prices.

Operating Cost

Costs incurred from the regular functioning of a company, encompassing lease payments, utility bills, and employee salaries.

Value-based Pricing

Pricing strategy based on the perceived value of a product or service to the customer rather than the cost of the product or competition prices.

Operating Costs

Costs incurred from routine operations of a company, not including expenses tied to manufacturing.