Question

Develop a production plan and calculate the annual cost.

a) Depends on the production scale
b) Fixed cost
c) Variable cost
d) Cannot be determined from the given information

Answer 1

A production plan is developed to determine how a company will produce the desired output. The annual cost can be calculated by considering the production scale, fixed costs, and variable costs.

Step-by-step explanation:

In business, a production plan is developed to determine how a company will produce the desired output. The annual cost can be calculated by considering the production scale, fixed costs, and variable costs.

The production scale refers to the quantity of output produced. As the production scale increases, the total cost of production will increase as well. This is because the company needs to spend more on variable costs to produce more output.

Fixed costs are the costs that remain constant regardless of the production scale. For example, if the fixed cost is $160, it will be incurred even if the company produces zero output. On the other hand, variable costs are directly proportional to the production scale. They increase as the company produces more output.

To calculate the annual cost, you need to consider the fixed costs, variable costs, and the production scale. You can use the given information to determine the relationship between the quantity of output produced and the cost of production.