ECONOMICS W/CONNECT+20  >C<
ECONOMICS W/CONNECT+20 >C<
20th Edition
ISBN: 9781259714993
Author: McConnell
Publisher: MCG CUSTOM
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Chapter 9, Problem 6DQ
To determine

Impact of economies of scale and diseconomies of scale on an average total cost.

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Situation 21-1 Diane's Donuts will begin selling donuts next week. Diane figures that the average variable cost to make each donut will be constant at $0.30. She has already paid $20,000 for the donut-making machinery and one year's rent. Refer to Situation 21-1. What will Diane's total variable costs be if she sells 36,500 donuts in one year? $10,950 O $18,450 $22,080 $12,500
A factory currently manufactures and sells 800 boats per year. Each boat costs $5,000 to produce. $4,000 of the per-boat costs are for materials and other variable costs, while the per-boat fixed costs (incurred on yearly rent, administrative, and other fixed costs) are $1,000. If boat orders increase to 1000 boats per year, how do per-unit costs change? 1) Variable costs fall to $3,200 per boat and fixed costs fall to $800 per boat 2) Variable costs are unchanged at $4,000 per boat and fixed costs fall to $800 per boat 3) Variable costs are unchanged at $4,000 per boat and fixed costs are unchanged at $1,000 per boat 4) Variable costs rise to $5,000 per boat and fixed costs are unchanged at $1,000 per boat
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