Question

Sea Side Enterprises is trying to predict the cost associated with producing its anchors. At a production level of 5 comma 500 ​anchors, Sea Side Enterprises average cost per anchor is $ 55. If $ 17 comma 000 of the costs are​ fixed, and the plant manager uses the cost equation to predict total​ costs, her forecast for 9 comma 000 anchors will be​ (Round any intermediary calculations to the nearest​ cent.)

Answer 1

$482,182

Step-by-step explanation:

The computation of the total cost is shown below:

As we know that

Total cost = Fixed cost + variable cost

But before that first we have to compute the variable cost

where,

Fixed cost is $17,000

And, the variable cost is

= 5,500 × $55 - $17,000

= $285,500

Now the total cost is

= Variable cost per unit × number of anchors + fixed cost

= $285,500 ÷ 5,500 × 9,000 + $15,000

= $482,182