Question

Meat​ Packers, Incorporated​ (MPI) preserves and packages various kinds of meats for transportation to grocery stores. To prepare and transport each meat package to a grocery​ store, the firm must purchase ​$40 in raw meat and pay ​$90 in wages for labor and ​$80 in fuel costs. In​ addition, the firm rents a factory for ​$14 comma 000 per month and makes ​$3 comma 000 in monthly payments on meat packaging equipment. Suppose the firm prepares and transports 2 comma 000 packages of meat per month. What are the​ firm's fixed and variable costs of production in a given​ month? The​ firm's fixed cost of production is ​$ nothing​, and its variable cost of production is ​$ nothing. ​(Enter numeric responses using​ integers.)

Answer 1

Total variable cost= $420,000

Total fixed costs= $17,000

Step-by-step explanation:

Giving the following information:

Variable cost per unit:

Direct material= ​$40

Direct labor= ​$90

Unitary variable overhead= ​$80

Fixed costs:

Rent= ​$14,000 per month

Equipment= ​$3,000

Production= 2,000 packages

Total variable cost= unitary cost* production in units

Total variable cost= 210*2,000= $420,000

Total fixed costs= $17,000