1.13. Don owns a small concrete-mixing company. His fixed cost is the cost of the concrete-batching machinery and his mixer trucks. His variable cost is the cost of the sand, gravel, and other inputs for producing concrete; the gas and maintenance for the machinery and trucks; and his workers. He is trying to decide how many mixer trucks to purchase. He has estimated the costs shown in the accompanying table based on estimates of the number of orders his company will receive per week.

a. For each level of fixed cost, calculate Don’s total cost for producing 20, 40, and 60 orders per week.

b. If Don is producing 20 orders per week, how many trucks should he purchase and what will his average total cost be? Answer the same questions for 40 and 60 orders per week.

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VC Quantity of trucks 20 40 60 FC orders orders orders 2 $6,000 $2,000 $5,000 $12,000 3 7,000 1,800 3,800 10,800 4 8,000 1,200 3,600 8,400