2. 2.

Computing average cost [LO 11.3] K-Too Everwear Company can manufacture mountain climbing shoes for $33.18 per pair in variable raw material costs and $24.36 per pair in variable labour expense. The shoes sell for $170 per pair. Last year, production was 145 000 pairs.

Fixed costs were $1 750 000. What were total production costs? What is the marginal cost per pair? What is the average cost? If the company is considering a one-time order for an extra 5 000 pairs, what is the minimum acceptable total revenue from the order? Explain.