Ace Card Company Has Variable Costs of $0

question 155

Multiple Choice

Ace Card Company has variable costs of $0.40 per unit of product. The remainder of its production costs are fixed. In May, the volume was 12,000 units and the total production costs were $6,900. How much are the fixed costs?

• A) $2,100
• B) $2,200
• C) $1,950
• D) $2,025

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Definitions:

Total Cost

The complete cost of producing a certain amount of output, including both fixed and variable costs.

Quantity

The amount or number of a material or immaterial thing not usually estimated by spatial measurement.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the quantity of output produced.

Marginal Cost

The increase in expense from creating one more unit of a product or service.