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Bindery Express LLC. is an online business. It mostly takes book binding orders from its customers, shipping out the final products. It also accepts print
- Bindery Express LLC. is an online business. It mostly takes book binding orders from its customers, shipping out the final products. It also accepts print orders used for advertisement. The first two columns of the table below report the number of machineries and number of employees that are utilized on daily basis at BE LLC.
Number of Machineries | Number of Employees | Output | Fixed Cost | Variable Cost | Total Cost | Average Cost | Marginal Cost |
K | L | Q | FC | VC | TC | ATC | MC |
3 | 2 | 13.2 | 27.5 | 515 | 542.5 | 41.1 | -- |
3 | 3 | 17.25 | 27.5 | 600 | 627.5 | 36.37 | 20.98 |
3 | 4 | 20.86 | 27.5 | 685 | 712.5 | 34.15 | 23.54 |
3 | 5 | 24.16 | 27.5 | 770 | 797.5 | 33.01 | 25.75 |
4 | 6 | 30.06 | 27.5 | 970 | 997.5 | 33.18 | 33.9 |
4 | 7 | 33.27 | 27.5 | 1055 | 1082.5 | 32.54 | 26.48 |
4 | 8 | 36.34 | 27.5 | 1140 | 1167.5 | 32.12 | 27.69 |
4 | 9 | 39.28 | 27.5 | 1225 | 1252.5 | 31.89 | 28.91 |
- The daily cost of one unit of book binding and printing machinery (K) is $115. Also, the daily cost of one employee (L) is $85. Fill out the column under Variable Cost (VC), computing the changes in daily variable cost that result from changes in number of machineries and employees.
- Using the fixed cost ($27.5 per day) and the computed daily variable cost (part c), fill out the column under Total Cost (TC).
- Using the computed daily output (part a) and total cost (part d), fill out the column under Average Cost (ATC).
- Using the computed daily output (part a) and total cost (part d), fill out the column under Marginal Cost (MC).
- describe how your computation of ATC differs from your computation of MC.
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