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Homework answers / question archive / You run a small business producing picture frames
You run a small business producing picture frames. This month, your total cost of production is $10,321, your variable cost of production is $4,233, and you produce 5,619 picture frames. It follows that
a. average variable cost is $.853.
b. average fixed cost is $1.083.
c. average cost is $1.98.
d. average cost is $3.65.
If total cost is $10,321 and total variable cost is $4,233, the total fixed cost is therefor:
Fixed Cost = $10,321 - $4,233 = $6,088
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The total units produced is 5,619 so:
Average total cost = $10,321 / 5,619 units = $1.84 per frame
Average variable cost = $4,233 / 5,619 units = $0.75 per frame
Average fixed cost = $6,088 / 5,619 units = $1.08 per frame
Answer: b
