Variable Cost of Production

The following questions refer to the following table which shows a firm's variable costs of production.

-Refer to Variable Cost of Production.If the total cost of producing the sixth unit of output is $190,fixed costs must be
A) $8.
B) $22.
C) $30.
D) $40.

Question

Variable Cost of Production

The following questions refer to the following table which shows a firm's variable costs of production.

-Refer to Variable Cost of Production.If the total cost of producing the sixth unit of output is $190,fixed costs must be
A) $8. 
B) $22. 
C) $30. 
D) $40.

Quizplus · Accepted Answer

Since the total cost of producing the sixth unit is $190 and variable costs are unknown, we can use the following equation to calculate the variable cost per unit:

Total cost = Fixed cost + (Variable cost per unit x Number of units)

Plugging in the values we know, we get:

$190 = Fixed cost + (Variable cost per unit x 6)

Since we don't know the variable cost per unit or fixed cost, we can't solve for either one directly. However, we can use the information given in the answer choices to determine the best option.

If fixed costs were $8, the equation would become:

$190 = $8 + (Variable cost per unit x 6)

Solving for variable cost per unit, we get:

$182 = Variable cost per unit x 6

Variable cost per unit = $30.33

However, since variable costs are usually expressed in whole numbers, this option seems unlikely.

If fixed costs were $22, the equation would become:

$190 = $22 + (Variable cost per unit x 6)

Solving for variable cost per unit, we get:

$168 = Variable cost per unit x 6

Variable cost per unit = $28

This seems like a more plausible option.

If fixed costs were $30, the equation would become:

$190 = $30 + (Variable cost per unit x 6)

Solving for variable cost per unit, we get:

$160 = Variable cost per unit x 6

Variable cost per unit = $26.67

This is also a possibility, but the previous option seems more likely.

If fixed costs were $40, the equation would become:

$190 = $40 + (Variable cost per unit x 6)

Solving for variable cost per unit, we get:

$150 = Variable cost per unit x 6

Variable cost per unit = $25

This is also a possibility, but the second option seems like the best choice based on the information given. Therefore, the answer is choice C.