Sea Side Enterprises is trying to predict the cost associated with producing its anchors.At a production level of 5,000 anchors,Sea Side Enterprises average cost per anchor is $52.00.If $15,000 of the costs are fixed,and the plant manager uses the cost equation to predict total costs,her forecast for 6,000 anchors will be
A)$52,000.
B)$260,000.
C)$312,000.
D)$309,000.

Question

Quizplus · Accepted Answer

D)
Total cost = $52 × 5,000 = $260,000
Variable cost = $260,000 - 15,000 = $245,000
$245,000 divided by 5,000 = $49.00
then
y = $49 (6,000)+ $15,000
y = $309,000

Sea Side Enterprises Is Trying to Predict the Cost Associated