Scenario 13-19
Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000.
-Refer to Scenario 13-19. The firm's fixed cost was
A)$2,000.
B)$12,000.
C)$28,000.
D)$42,000.

Question

Quizplus · Accepted Answer

To find the fixed cost, we need to use the formula:
Total Cost = Fixed Cost + Variable Cost
We know that the total cost was $40,000, and the variable cost was $28,000. Therefore, the fixed cost must be:
Fixed Cost = Total Cost - Variable Cost
Fixed Cost = $40,000 - $28,000
Fixed Cost = $12,000
Therefore, the answer is B, $12,000.

Scenario 13-19 Doreen's Dairy Produces and Sells Swiss Cheese. Last Year, It