A Firm Has the Capacity to Produce 3,100 Units Per

question 32

Multiple Choice

A firm has the capacity to produce 3,100 units per week. At 80% capacity, the average total cost per unit is $12.50 and the average variable cost per unit is $7.50. What is the total fixed cost per week, assuming the firm is still operating within its relevant range?

• A) $10,400
• B) $14,400
• C) $ 8,400
• D) $12,400

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Definitions:

Interest Revenue

Income earned from the lending of funds or investment in interest-bearing assets, like loans, bonds, or savings accounts.

360-Day Year

An accounting convention that simplifies interest calculations by assuming there are 360 days in a year.

Note Payable

A financial obligation or loan evidenced by a written promissory note specifying payment terms.

Discounted Note

A promissory note whose proceeds are issued at a price lower than its face value, with the difference compensating the lender for risk.