1. A business firm produces and sells specialty cakes. Last
year, the firm produced 12,000 cakes and sold each cake for $20. In
producing the 12,000 cakes, it incurred variable costs of $150,000
and a total cost of $183,000. Which of the following statements is
(are) correct?
(x) The firm’s economic profit for the year was more than $51,250
but less than $54,375.
(y) Fixed costs amounted to $33,000 and average fixed costs are
$2.75 per unit for 12,000 cakes.
(z) In producing the 12,000 specialty cakes, the firm’s average
variable cost was more than $12.25 per cake and its average total
cost was less than $15.75 per cake.
A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only E. (y) only
2. Which of the following statements is (are) correct?
(x) If marginal cost is $10 and rising, average variable cost could
be either greater than or less than $10.
(y) If you know the average variable cost of 75 units then you have
sufficient information to calculate the marginal cost of the 75th
unit.
(z) If you know the average fixed cost of 600 units then you have
sufficient information to calculate the average fixed cost of 400
units.
A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only
E. (x) only
1. A business firm produces and sells specialty cakes. Last year, the firm produced 12,000 cakes...
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Kubin Company's relevant range of production is 12,000 to 16,000 units. When it produces and sells 14,000 units, its average costs per unit are as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Amount per Unit $ 7.30 $ 4.30 $ 1.80 $ 5.30 $ 3.80 $ 2.80 $ 1.30 $ 0.80 Required: 1. If 12,000 units are produced and sold, what is the variable cost...
Kubin Company’s relevant range of production is 12,000 to 16,000 units. When it produces and sells 14,000 units, its average costs per unit are as follows: Amount per Unit Direct materials $ 7.30 Direct labor $ 4.30 Variable manufacturing overhead $ 1.80 Fixed manufacturing overhead $ 5.30 Fixed selling expense $ 3.80 Fixed administrative expense $ 2.80 Sales commissions $ 1.30 Variable administrative expense $ 0.80 Required: 1. If 12,000 units are produced and sold, what is the variable...