Problem 10-4 Fixed and Variable Costs (LO2)

In a slow year, Deutsche Burgers will produce 2.0 million hamburgers at a total cost of $3.6 million. In a good year, it can produce 4.5 million hamburgers at a total cost of $5.1 million.

a.	What are the fixed costs of hamburger production? (Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.)

Fixed cost

$ million

b.	What is the variable cost per hamburger? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Variable cost

$ per burger

c.	What is the average cost per burger when the firm produces 1 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Average cost

$ per burger

d.	What is the average cost per burger when the firm produces 2 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Average cost

$ per burger