Austin's total fixed cost is $3 600 a month for making 100 000 cupcakes at his cupcake bakery.He employs 20 workers and pays each worker $600 a month.If labour is his only variable cost,what is Austin's total cost per month for making 100 000 cupcakes?
A) $3 600
B) $1 200
C) $15 600
D) $12 000

Question

Quizplus · Accepted Answer

We know that Austin's total fixed cost is $3 600. This means that it does not change regardless of the number of cupcakes produced.

The variable cost is the labor cost, which is paid to the workers. Austin employs 20 workers and pays each worker $600 a month. Therefore, the total variable cost is:

20 workers x $600/worker = $12 000

The total cost is the sum of the fixed cost and the variable cost:

Total cost = Fixed cost + Variable cost 
Total cost = $3 600 + $12 000 
Total cost = $15 600

Therefore, the total cost per month for making 100 000 cupcakes is $15 600.

The best choice is C.

Austin's Total Fixed Cost Is $3 600 a Month for Making