Question

Darren runs a barbershop with average fixed costs of $60 per day and a total output of 50 haircuts per day. Darren shuts down every year during the last week of July and the first week of August (meaning it is open 50 weeks a year). What is his annual fixed cost if he is open six days per week?

Answer 1

$18,000

Step-by-step explanation:

The computation of annual fixed cost is shown below:-

For computing the annual fixed cost first we need to compute the average fixed cost

Average fixed cost = $60 × 6

= $360 per week

Annual fixed cost = Average fixed cost per week × Total output per day

= $360 × 50

= $18,000

Therefore for computing the annual fixed cost we simply multiply the average fixed cost per week with total output per day.