Table 93 Table 93 Shows Cost Data for Lotus Lanterns, a Producer of Lanterns

question 163

Multiple Choice

Table 9.3
$\begin{array}{|c|c|c|c|c|}\hline \begin{array}{c}\text { Quantity of } \\\text { Lanterns }\end{array} & \begin{array}{c}\text { Fixed Cost } \\\text { (dollars) }\end{array} & \begin{array}{c}\text { Variable Cost } \\\text { (dollars) }\end{array} & \begin{array}{c}\text { Total Cost } \\\text { (dollars) }\end{array} & \begin{array}{c}\text { Average Total Cost } \\\text { (dollars) }\end{array} \\\hline 75 & 200 & 170 & 370 & 4.93 \\\hline 80 & 200 & 230 & 430 & 5.36 \\\hline 90 & 200 & & & 7.67 \\\hline 100 & 200 & 810 & & \\\hline 115 & 200 & & & 11.8 \\\hline 117 & 200 & 1264 & 1464 &12.5 \\\hline 120 & 200 & 1480 & & \\\hline\end{array}$
Table 9.3 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 9.3.What is the average variable cost per unit of production when the firm produces 90 lanterns?

• A)$490
• B)$33.67
• C)$7.67
• D)$5.44

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Definitions:

Required Rate of Return

The minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.

Contribution Margin

Contribution margin is the amount by which sales revenue exceeds variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Production Constraint

Any factor that limits the output of a production process, such as limited machine capacity or shortages of materials or labor.

Constrained Resource

A limited resource that restricts an organization's ability to produce goods or services, affecting throughput and operational efficiency.