Question

Krazy Kettle Corn is a small refreshment stand located near a football stadium. Its fixed expenses total 400 per week and the variable cost per bag of popcorn is0.50. What is the total cost of producing 100 bags of popcorn?

1) $400
2) $450
3) $500
4) $550

Answer 1

The total cost of producing 100 bags of popcorn for Krazy Kettle Corn, including both fixed and variable costs, is $450. This is calculated by adding the fixed expenses of $400 to the variable costs of $50 (100 bags at $0.50 each).

Step-by-step explanation:

The question concerns the calculation of total costs for producing a certain number of goods, taking into account both fixed and variable costs. To calculate the total cost of producing 100 bags of popcorn, we need to add fixed expenses to the total variable costs. Krazy Kettle Corn's fixed expenses are $400 per week, and the variable cost per bag of popcorn is $0.50.

For 100 bags, the total variable cost would be 100 bags × $0.50/bag = $50. Therefore, the total cost is the sum of fixed and variable costs, which equals $400 + $50 = $450.

The correct answer is 2) $450. This concept is similar to analyzing situations like the raspberry farm in the provided information, where a business must decide whether to continue operation or shut down based on whether the price is above or below average variable cost.