Question

Meat​ Packers, Incorporated​ (MPI) preserves and packages various kinds of meats for transportation to grocery stores. To prepare and transport each meat package to a grocery​ store, the firm must purchase ​$6060 in raw meat and pay ​$5050 in wages for labor and ​$4040 in fuel costs. In​ addition, the firm rents a factory for ​$10 comma 00010,000 per month and makes ​$3 comma 0003,000 in monthly payments on meat packaging equipment. Suppose the firm prepares and transports 5 comma 0005,000 packages of meat per month. What are the​ firm's fixed and variable costs of production in a given​ month?

Answer 1

Variable cost=$750,000

Fixed costs= $13,000

Step-by-step explanation:

Giving the following information:

The firm must purchase ​$60 in raw meat and pay ​$50 in wages for labor and ​$40 in fuel costs. Also, the firm rents a factory for ​$10,000 per month and makes ​3,000 in monthly payments on meat packaging equipment. Suppose the firm prepares and transports 5,000 packages of meat per month.

Variable cost= raw meat + wages + fuel= (60 + 50 + 40)*5,000= $750,000

Fixed costs= rent + packaging equipment= 13,000