The Akron Slugger Company produces various types of wooden baseball bats. It has calculated the average cost per unit of a production level of 8 comma 000 bats to be $ 13. If $ 22 comma 800 of the total costs are fixed, what is the variable cost of producing each bat?

Question

Bibbles

Business

30 August, 06:12

The Akron Slugger Company produces various types of wooden baseball bats. It has calculated the average cost per unit of a production level of 8 comma 000 bats to be $ 13. If $ 22 comma 800 of the total costs are fixed, what is the variable cost of producing each bat?

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Answers (1)

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Porky · Answer 1

The variable cost per bat is $10.15

Explanation:

The total cost can be calculated by multiplying the average cost per unit by the number of units. At the production level of 8000 units at $13 per unit, the total cost will be,

Total cost = 13 * 8000 = $104000

The total cost is made up of both fixed and variable costs.

Total variable costs = Total costs - total fixed costs

Total variable costs = 104000 - 22800 = $81200

The variable cost per unit = 81200 / 8000 = $10.15 per unit