Question

produces deluxe razors that compete with​ Gillette's Mach line of razors. Total manufacturing costs are $ 170 comma 000 when 20 comma 000 packages are produced. Of this​ amount, total variable costs are $ 80 comma 000. What are the total production costs when 25 comma 000 packages of razors are​ produced? Assume the same relevant range

Answer 1

Answer:

Total cost= $190,000

Explanation:

Giving the following information:

Total manufacturing costs are $170,000 when 20,000 packages are produced.

The total variable costs are $80,000 at 20,000 units.

First, we need to determine the unitary variable cost and total fixed costs.

Unitary variable cost= total variable cost/ number of units

Unitary variable cost= 80,000/20,000= $4 per unit

Total fixed costs= total cost - total variable cost

Total fixed costs= 170,000 - 80,000= $90,000

Now, we need to determine the total cost of 25,000 units.

Total cost= 90,000 + 4*25,000= $190,000