Question

Froot Loop Inc., a cereal manufacturer, has variable costs of $0.40 per unit of product. In May, the volume of production was 24,000 units, and units sold were 20,100 . The textal production costs incurred were $31,700. What are the fixed costs per month?

a.$22,100
b.$23,660
c.$9600
d.$7700

Answer 1

To calculate the fixed costs per month for Froot Loop Inc., subtract the total variable costs from the total production costs for May, which gives us $22,100 as the fixed costs.

Step-by-step explanation:

The question is asking us to determine the fixed costs per month for Froot Loop Inc., given their variable costs and total production costs. We know that the variable costs are $0.40 per unit and that they produced 24,000 units, so the total variable costs for May were 24,000 units x $0.40 = $9,600. The total production costs for May were $31,700. To find the fixed costs, we subtract the total variable costs from the total production costs: $31,700 - $9,600 = $22,100. Therefore, the fixed costs per month are $22,100, which corresponds to option a.