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14 July, 15:25

Advantage, Inc., a tennis equipment manufacturer, has variable costs of $ 0.80 per unit of product. In August, the volume of production was 27 comma 000 units, and units sold were 21 comma 400. The total production costs incurred were $ 30 comma 800. What are the fixed costs per month?

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  1. 14 July, 15:44
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    Total fixed cost = $9,200

    Explanation:

    Giving the following information:

    variable costs = $0.80 per unit.

    production = 27,000 units

    The total production costs incurred were $30,800.

    First, we need to calculate the total variable cost at the production level of 27,000 units.

    Total variable cost = 0.8*27,000 = $21,600

    Total cost = total fixed cost + total variable cost

    30,800 = total fixed cost + 21,600

    Total fixed cost = 30,800 - 21,600

    Total fixed cost = $9,200
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