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Lets say a company in March produces 15,000 widgets per month. At that volume, their fixed costs are $45,000 and total variable costs are $75,000
Lets say a company in March produces 15,000 widgets per month. At that volume, their fixed costs are $45,000 and total variable costs are $75,000 for a total cost of $120,000.
- What is the fixed cost per unit and the variable cost per unit?
Then in April, the same company produces 18,000 widgets.
- What is the total cost for April?
- Which of the two cost behaviors change?
- Why did those costs change?
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