In a slow year, Deutsche Burgers will produce 3.8 million hamburgers at a total cost of $5.4 million. In a good year, it can produce 5.8 million hamburgers at a total cost of $6.5 million. a. What are the fixed costs of hamburger production? b. What is the variable cost per hamburger? c. What is the average cost per burger when the firm produces 3 million hamburgers? d. What is the average cost per burger when the firm produces 4 million hamburgers? e. Why is the average cost lower when more burgers are produced?
In a slow year, Deutsche Burgers will produce 3.8 million hamburgers at a total cost of $5.4 million. In a good year, it can produce 5.8 million hamburgers at a total cost of $6.5 million. a. What are the fixed costs of hamburger production? b. What is the variable cost per hamburger? c. What is the average cost per burger when the firm produces 3 million hamburgers? d. What is the average cost per burger when the firm produces 4 million hamburgers? e. Why is the average cost lower when more burgers are produced?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:In a slow year, Deutsche Burgers will produce 3.8 million hamburgers
at a total cost of $5.4 million. In a good year, it can produce 5.8
million hamburgers at a total cost of $6.5 million.
a. What are the fixed costs of hamburger production?
b. What is the variable cost per hamburger?
c. What is the average cost per burger when the firm produces 3
million hamburgers?
d. What is the average cost per burger when the firm produces 4
million hamburgers?
e. Why is the average cost lower when more burgers are produced?
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