Below are some cost data pertaining to Plant 1,which has total fixed costs of $1,000.Suppose that Plant 2 is exactly twice the size of Plant 1 while using (at economic capacity) twice the amount of labour and materials,and that it produces exactly twice the output.Further,assume that the prices of these inputs do not change.
-Refer to the information above to answer this question.How much is total fixed cost in Plant 2?
Definitions:
Incremental Revenues
Additional income generated from a new action or decision, beyond what is currently being earned.
Allocated Fixed Costs
Allocated fixed costs are fixed costs that have been distributed among different departments or products based on a predetermined basis.
Variable Costs
Expenses that vary directly with the level of production or sales volume.
Outside Supplier
A third-party entity that provides goods or services to a company, typically not affiliated with the purchasing company.
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