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

Question

Business

Arnie

27 February, 17:57

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

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Addison Guerrero · Answer 1

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