Question

Lauren owns a bakery. her total costs are $150,000 per year, and her variable costs are $85,000. this means that her fixed costs are:

Answer 1

$65,000

Step-by-step explanation:

Given information about Lauren;

Total cost Tc = $150,000

Variable cost Vc = $85,000

Fixed cost Fc = ?

Total cost = Fixed cost + Variable cost

The fixed cost is the cost incurred irrespective of the level of activities while the variable cost is the cost incurred that depends on the level of activities

The combination of both costs gives the total cost.

Therefore,

$150,000 = $85,000 + Fc

Fc = $150,000 - $85,000

Fc = $65,000