Meat Packers, Incorporated (MPI) preserves and packages various kinds of meats for transportation to grocery stores. To prepare and transport each meat package to a grocery store, the firm must purchase $6060 in raw meat and pay $5050 in wages for labor and $4040 in fuel costs. In addition, the firm rents a factory for $10 comma 00010,000 per month and makes $3 comma 0003,000 in monthly payments on meat packaging equipment. Suppose the firm prepares and transports 5 comma 0005,000 packages of meat per month. What are the firm's fixed and variable costs of production in a given month?

Question

Alexzander Carson

Business

31 October, 09:22

Meat Packers, Incorporated (MPI) preserves and packages various kinds of meats for transportation to grocery stores. To prepare and transport each meat package to a grocery store, the firm must purchase $6060 in raw meat and pay $5050 in wages for labor and $4040 in fuel costs. In addition, the firm rents a factory for $10 comma 00010,000 per month and makes $3 comma 0003,000 in monthly payments on meat packaging equipment. Suppose the firm prepares and transports 5 comma 0005,000 packages of meat per month. What are the firm's fixed and variable costs of production in a given month?

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Answers (1)

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Sidney Atkinson · Answer 1

Variable cost=$750,000

Fixed costs = $13,000

Explanation:

Giving the following information:

The firm must purchase $60 in raw meat and pay $50 in wages for labor and $40 in fuel costs. Also, the firm rents a factory for $10,000 per month and makes 3,000 in monthly payments on meat packaging equipment. Suppose the firm prepares and transports 5,000 packages of meat per month.

Variable cost = raw meat + wages + fuel = (60 + 50 + 40) * 5,000 = $750,000

Fixed costs = rent + packaging equipment = 13,000