Question

Froot Loop Inc., a cereal manufacturer, has variable costs of $0.40 per unit of product. In May, the volume of production was 25,000 units, and units sold were 21,600. The total production costs incurred were $30,600. What are the fixed costs per month

Answer 1

the fixed cost per month is $20,600

Step-by-step explanation:

The computation of the fixed cost is given below:

Fixed costs = Total Production Costs - Variable costs

= $30600 - $0.40 per unit × 25000 units

= $30600 - $10,000

= $20,600

hence, the fixed cost per month is $20,600

We simply deduct the variable cost from the total production cost so that the fixed cost could come