Advantage, Inc., a tennis equipment manufacturer, has variable costs of $ 0.80 per unit of product. In August, the volume of production was 27 comma 000 units, and units sold were 21 comma 400. The total production costs incurred were $ 30 comma 800. What are the fixed costs per month?

Question

Business

Melany Carter

21 December, 23:09

Advantage, Inc., a tennis equipment manufacturer, has variable costs of $ 0.80 per unit of product. In August, the volume of production was 27 comma 000 units, and units sold were 21 comma 400. The total production costs incurred were $ 30 comma 800. What are the fixed costs per month?

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Answers (1)

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Haas · Answer 1

Total fixed cost = $9,200

Explanation:

Giving the following information:

variable costs = $0.80 per unit.

production = 27,000 units

The total production costs incurred were $30,800.

First, we need to calculate the total variable cost at the production level of 27,000 units.

Total variable cost = 0.8*27,000 = $21,600

Total cost = total fixed cost + total variable cost

30,800 = total fixed cost + 21,600

Total fixed cost = 30,800 - 21,600

Total fixed cost = $9,200