Table 67 Table 67 Shows Cost Data for Lotus Lanterns, a Producer of |

question 31

Multiple Choice

Table 6.7
$$\begin{array} { | c | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Lanterns }\end{array} & \begin{array} { c } \text { Fixed Cost } \\\text { (dollars) }\end{array} & \begin{array} { c } \text { Variable Cost } \\\text { (dollars) }\end{array} & \begin{array} { c } \text { Total Cost } \\\text { (dollars) }\end{array} & \begin{array} { c } \text { Average } \\\text { Total Cost } \\\text { (dollars) }\end{array} \\\hline 75 & 200 & 170 & 370 & 4.93 \\\hline 80 & 200 & 230 & 430 & 5.36 \\\hline 90 & 200 & & & 7.67 \\\hline 100 & 200 & 810 & & \\\hline 115 & 200 & & & 11.8 \\\hline 117 & 200 & 1264 & 1464 & 12.5 \\\hline 120 & 200 & 1480 & & \\\hline\end{array}$$ Table 6.7 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
-Refer to Table 6.7.The marginal cost per unit of production when the firm produces 100 lanterns is _________.

• A) $420
• B) $32
• C) $11.1
• D) $8.1

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Definitions:

Cost of Capital

The cost of funds used for financing a business, often considered as the required rate of return to make a capital budgeting project, such as building a new factory, worthwhile.

Net Present Value

A method used to evaluate the feasibility of a project or investment by calculating the difference between the present value of cash inflows and outflows over a period of time.

Feasible

Refers to an option or action that is possible or practicable within available resources and constraints.

Present Value

The present value of a sum of money or a series of cash flows expected in the future, determined using a particular rate of return.