EXAMPLE Total cost 1400 1200 1000 800 600 400 200 100 200 Levels of activity, units Based on the above scatter graph, calculate: a) The period fixed cost. b) The variable cost per unit. c) The total cost for manufacturing 500 units.

EXAMPLE Total cost 1400 1200 1000 800 600 400 200 100 200 Levels of activity, units Based on the above scatter graph, calculate: a) The period fixed cost. b) The variable cost per unit. c) The total cost for manufacturing 500 units.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Production And Costs

Section8.4: Costs Of Production: Total, Average, Marginal

Problem 1ST

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

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EXAMPLE
Total cost
1400
1200
1000
800
600
400
200
100
200
Levels of activity, units
Based on the above scatter graph, calculate:
a) The period fixed cost.
b) The variable cost per unit.
c) The total cost for manufacturing 500 units.

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