Question

​Advantage, Inc., a tennis equipment​ manufacturer, has variable costs of $ 0.60 per unit of product. In​ August, the volume of production was 27,000 ​units, and units sold were 20,300. The total production costs incurred were $ 31,000. What are the fixed costs per​ month?

Answer 1

Fixed costs = $18,820

Step-by-step explanation:

Data provided in the question:

Volume of production = 27,000 ​units

Variable costs = $0.60 per unit

Number of units sold = 20,300

The total cost of production = $31,000

Now,

The total cost of production = Fixed cost + Total variable cost

or

Fixed costs = Total Production Costs - Total variable costs

also,

Total Variable cost = Variable cost per unit × Volume of production

or

= $0.60 × 20,300

= $12,180

Therefore,

⇒ Fixed costs = $31,000 - $12,180

or

Fixed costs = $18,820