Computing Average Cost Makaveli SpA can manufacture mountain climbing shoes for €24.86 per pair in variable raw material costs and €14.08 per pair in variable labour expense. The shoes sell for €135 per pair.

Last year, production was 120,000 pairs. Fixed costs were

€1,550,000. 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.