Dapper Hat Makers is in the business of designing and producing specialty hats. The material used for derbies costs $4.50 per unit, and Dapper pays each of its two full-time employees $250 per week. If the employees make 50 derbies in one week, what is the fixed cost per derby? (Round to two decimal places where necessary.)
A) $4.50
B) $5.00
C) $10.00
D) $14.50

Question

Quizplus · Accepted Answer

Fixed cost per derby refers to the cost that remains constant regardless of the number of units produced. In this case, the fixed cost includes the weekly wages paid to the two full-time employees.

Fixed Cost per derby = (Wages/Units Produced) + Material Cost per Unit
= ($500/50) + $4.50
= $10.00

Therefore, the Fixed Cost per derby is $10.00, and the best choice for the answer is option C. Option A is incorrect because it only considers the material cost and not the wages. Option B and D are incorrect as they do not provide the correct calculated fixed cost per derby.

Dapper Hat Makers Is in the Business of Designing and Producing