CalcuCo Hired Effner & Associates to Design a New Computer-Aided

question 104

Multiple Choice

CalcuCo hired Effner & Associates to design a new computer-aided manufacturing facility. The new facility was designed to produce 300 computers per month. The variable costs for each computer are $660 and the fixed costs total $74,700 per month. The average cost per unit, if the facility normally expects to operate at eighty-five percent of capacity, is calculated to be (round to nearest cent) :

• A) $952.94.
• B) $909.00.
• C) $936.67.
• D) $971.25.
• E) $942.47.

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Definitions:

Price

The money amount expected, needed, or conferred as a payment for a product.

Miles

A unit of distance or length, traditionally equal to 5280 feet in the United States and slightly more than 1609 meters by international agreement.

Perfect Substitutes

Goods that a consumer is completely indifferent between, meaning that one can replace the other in consumption without any loss of utility.

Income Effect

The income effect describes how a change in a consumer's income affects their purchasing power and consumption choices.