Suppose the Total Cost of Producing 40,000 Flash Drives Is

question 234

Essay

Suppose the total cost of producing 40,000 flash drives is $120,000, and the fixed cost is $30,000.
a.What is the variable cost?
b.When output is 40,000, what are the average variable cost and the average fixed cost?
c.Assuming the cost curves have the usual shape, is the dollar difference between the average total cost and the average variable cost greater when the output is 40,000 flash drives or when the output is 60,000 flash drives? Explain.

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Definitions:

Automobile Manufacturer

A company engaged in the design, production, marketing, and sales of motor vehicles.

Interior Upholstery

A type of material, including fabrics and leathers, used to cover indoor furniture and decor elements, enhancing the interior aesthetic and comfort.

Direct Materials

Raw materials that are directly attributed to the production of goods, identifiable as part of the finished product.

Prime Costs

The direct costs directly attributable to the manufacture of goods, typically including direct materials and direct labor costs.