Question

Question 2: Your fruit selling business has a fixed cost of 10 AED. The variable costs schedule is as given: (a): Compute the missing costs and complete the table up to quantity =6 (use at least 2 decimal places) (2.5 marks) Quantity of Variable Costs Total Cost (TC) Average Average Fixed Average Total Marginal Cost fruits sold in (VC) Variable Cost Cost (AFC) Cost (ATC) (MC) kgs) (AVC) N/A N/A N/A

Answer 1

Quantity	Fixed Cost	Variable Cost	Total Cost	Average variable Cost	Average Fixed Cost	Average Total Cost	Marginal Cost
0	10	0	10	--	--	--	--
1	10	1	11	1	10	11	1
2	10	2	12	1	5	6	1
3	10	4	14	1.33	3.33	4.66	2
4	10	7.5	17.5	1.87	2.50	4.37	3.5
5	10	13	23	2.60	2	4.60	5.5
6	10	21	31	3.50	1.66	5.16	8

The missing values are calculated in a sequence of 10 steps

1) As fixed cost is given 10 hence it will remain same at every output

2) Total Cost = Fixed cost + variable cost

3) At 1 unit of output, total cost will be

Total Cost = Fixed cost + variable cost

Total Cost = 10 + 1

Total Cost = 11

4) At 2 units of output variable cost and total cost is

Variable cost = Average variable cost x quantity

Variable cost = 1 x 2

Variable cost = 2

Total Cost = Fixed cost + variable cost

Total Cost = 10 + 2

Total Cost = 12

5) At 3 unit of output, total cost will be

Total Cost = Fixed cost + variable cost

Total Cost = 10 + 4

Total Cost = 14

6) At 4 unit of output, variable cost will be

Total Cost = Fixed cost + variable cost

Variable cost = Total cost - Fixed cost

Variable cost = 17.5 - 10

Variable cost = 7.5

7) At 5 unit of output, total cost will be

Total Cost = Fixed cost + variable cost

Total Cost = 10 + 13

Total Cost = 23

8) At 6 unit of output, total cost will be

Total Cost = Fixed cost + variable cost

Total Cost = 10 + 21

Total Cost = 31

9) Average Variable Cost = Variable Cost / quantity

Average Fixed Cost = Fixed Cost / Quantity

Average Total Cost = Total Cost / Quantity

10) Marginal cost is the change in total cost when additional units are produced.

MCn = TCn -TCn-1

For at 3 units of output

MC3 = TC3 -TC2

MC3 = 14 - 12

MC3 = 2

Similarly all are calculated like this