The Akron Slugger Company produces various types of wooden baseball bats. It has calculated the average cost per unit of a production level of 7800 bats to be $14. If $22,700 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, her forecast for 9000 bats will be (Round any intermediary calculations to the nearest cent.)
A)$16,800
B)$109,200
C)$126,000
D)$122,510

Question

Quizplus · Accepted Answer

First, find the variable cost per unit by subtracting the fixed cost from the total cost and dividing by the number of units. Total cost for 7800 bats = 7800 * $14 = $109,200. Variable cost = ($109,200 - $22,700) / 7800 = $11.10 per bat. For 9000 bats, total cost = Fixed cost + (Variable cost per unit * Number of units) = $22,700 + ($11.10 * 9000) = $22,700 + $99,900 = $122,600.

The Akron Slugger Company Produces Various Types of Wooden Baseball