Question

Viva sells its waterproof phone case for $124 per unit. Fixed costs total $247,000, and variable costs are $37 per unit. What is the total cost to produce 500 units of the phone case?

1) $18,500
2) $18,500,000
3) $19,500
4) $19,500,000

Answer 1

The total cost to produce 500 waterproof phone cases, considering both fixed costs of $247,000 and variable costs of $37 per unit, amounts to $265,500. This figure is derived from the sum of total fixed costs and total variable costs for 500 units.

Step-by-step explanation:

Calculating Total Cost for Producing Phone Cases

To calculate the total cost of producing 500 units of the phone case, we need to consider both the fixed costs and the variable costs. The fixed costs total $247,000 and do not change with the number of units produced. Variable costs, however, do change depending on the production volume. The variable cost per unit is $37.

First, we calculate the total variable costs for 500 units:
500 units × $37 per unit = $18,500

Next, we add the fixed costs to find the total cost:
$247,000 (fixed costs) + $18,500 (total variable costs) = $265,500

Therefore, the total cost to produce 500 units is $265,500, which is not among the provided options. If these options were meant to be correct, there may be an error in the options listed in the question. It's crucial to ensure that we have accurate information for decision-making in terms of production costs.