Sea Side Enterprises is trying to predict the cost associated with producing its anchors. At a production level of 5100 anchors, Sea Side Enterprises' average cost per anchor is $53 If $17,000 of the total costs are fixed, what is the variable cost of producing each anchor?
A)$3.33
B)$49.67
C)$320.75
D)$53.00

Question

Quizplus · Accepted Answer

The average cost per anchor can be decomposed into fixed cost per anchor and variable cost per anchor. If we let variable cost per anchor be x, then we have:

$53 = $17,000/5100 + x

Solving for x, we get:

x = $49.67

Sea Side Enterprises Is Trying to Predict the Cost Associated