Your firm is a coffee shop

Accounting Dec 09, 2020

Your firm is a coffee shop. Your fixed costs are the cost of the shop, $900. Your variable costs are the costs of labor and the wage paid to each worker is $120 each. Employing 3 workers your average product is 46 cups of coffee. Your average total cost is :

Expert Solution

In the above-mentioned case study, the total cost level of employing three workers can be computed as:

Total cost level = fixed cost level + variable cost level

Total cost level = $900 + 120×3120×3

Total cost level = $1260

Now, the average cost level would be:

The average total cost level = 126046126046

ATC = $29.30

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