At a firm's current output level of 200 units per week,it has 10 employees at a weekly wage of $500 each.Raw materials,which are ordered and delivered daily,cost $1,000 per week.The weekly cost of the firm's capital is $1,250.Which of the following statements is correct?
A)Total variable cost is $5,000;total fixed cost is $2,250;total cost is $7,250.
B)Total variable cost is $6,000;total fixed cost is $1,250;total cost is $7,250.
C)Total variable cost is $1,250;total fixed cost is $6,000;total cost is $7,250.
D)Total variable cost is $2,250;total fixed cost is $500;total cost is $2,750.
E)Total variable cost is $1,500;total fixed cost is $1,250;total cost is $2,750.

Question

Quizplus · Accepted Answer

Total variable cost = (Number of employees x Wage) + Raw materials cost
Total variable cost = (10 x $500) + $1,000
Total variable cost = $6,000
Total fixed cost = Capital cost
Total fixed cost = $1,250
Total cost = Total variable cost + Total fixed cost
Total cost = $6,000 + $1,250
Total cost = $7,250. Therefore, choice B is correct.

At a Firm's Current Output Level of 200 Units Per