Question

assignment. Sed to this PC Search View Help Acrobat Rerences Mailings yout Assignment 2 Summer 2020 1 Using all this information complete the following table and answer the questions It would be easie if you set this up in an Excel spreadsheet. When you are done, You must submit as a Word document with your answers. You will use this table to answer questions 2 and 3 (4 marks) Your first step is to identity which are foxed costs and which are variable costs. If you will have to keep paying the cost whether you produce units of the product Ox 10,000 units, then it is a fixed cost. In the short run you have to keep paying it In the long run you may be able to change these fixed costs. A variable cost changes based on how much of the product you produce But the variable costs may not change all at the same time Q Fol workers TVC AVC АГС ATC MC TC FC VC TVCI FCI TCIG AICT AQ 0 0 1 10000 2 21000 3 35000 4 50000 5 65000 73000 6 7 70000 Focus up

A company produces gold picture frames. The cost per picture frame is:

Materials                                                        $9

Packaging                                                     $1

Decorations on the frame                           $5

Shipping and handling                                $1.5

Each worker earns $30,000 annually in salary and benefits. The number of workers changes based on the level of production. This means this is a variable cost.

The artist who creates the designs on the picture frames is paid $25,000 annually. Senior management are paid a total of $200,000 annually. Other annual costs are:

Taxes and Insurance                                                  $17,000

Utilities                                                                           $50,000

Rent                                                                             $300,000

Miscellaneous Overhead Expenses                         $24,000

The following production is possible:

No. Of Workers	0	1	2	3	4	5	6	7
No. Of Picture Frames that can be made	0	10,000	21,000	35,000	50,000	65,000	73,000	70,000

Answer 1

FIXED COST = Artist who creates designs + senior management paid + taxes and Insurance + Utilities + Rent + Miscellaneous overhead expenses

FC= 25000 + 200000 + 17000 + 50000 + 300000 + 24000

FC = $616000

VARIABLE COST = Total cost of frame + worker earning in salary and benefits

VARIABLE COST = (Cost per picture frame)* number of frames + worker earning * number of workers

VC1 = (9+1+5 +1.5) * 10000 + 30000 * 1

VC1 = 195000

V C2 = 16.5 * 21000 + 30000 * 2

V C2 = 406500

As we have calculated variable cost for 1 and 2 we can find for others also up to worker 7 . And i have summarised in the table below-

MC soofwarkerf a live TAVC ITE PATC TAFC l'ovela efetue Tela Arc / AQIFY 0 616000 0 O 0 + 10000 195000 / 19.5 81100081-1 19.5 61-6 2 21000 406500 19-36 1022500 48.6919-23 29.33 3 35000 667500 19-07 128350 36.67 18.64 1746 Ч 50,000 945000 18-1 1561000 31 22 18.5 12:32 5 185,000/1222500 18.81 183850028-28 18.5 19.48 6 173000 1384500 18.96 2000500 27.4 200258.44 Mark 7 RAFATAL 70000 1365000 1905 1981000 2019 am 6.5 65 8.8

$AVC = \frac{TVC}{Q}$

$AVC_{1}= \frac{195000}{10000}$

$AVC_{2}= \frac{406500}{21000}$

Similarly you can find AVC till 7 workers

Similarly you can find Total cost till 7 workers

$ATC = \frac{TC}{Q}$

ATC 811000 10000

$ATC_{2} = \frac{1022500}{21000}$

Similarly you can find ATC till 7 workers

$AFC = \frac{TFC}{Q}$

$AFC_{1}= \frac{616000}{10000}$

$AFC_{2}= \frac{616000}{21000}$

Similarly you can find AFC till 7 workers

$MC = \frac{\Delta TC}{\Delta Q}$

$MC_{1} = \frac{811000-616000}{10000-0}$

$MC_{2} = \frac{1022500-811000}{21000-10000}$

Similarly you can find MC till 7 workers.

I hope now you can do it and understands it

Thanks