1 October, 05:46

# 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?

+4
1. 1 October, 07:59
0
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