Question

The average total cost of producing electronic calculators in a factory is $10 at the current output level of 260 units per week. If fixed cost is $880 per week, then what is the firm's variable cost? (enter answer as just a number no commas, dollar signs or the like).

Answer 1

6.62

Step-by-step explanation:

total production costs = total output x average total cost per unit = 260 calculators x $10 per unit = $2,600

total fixed costs = $880

total variable costs = total production costs - total fixed costs = $2,600 - $880 = $1,720

variable cost per unit = total variable costs / total output = $1,720 / 260 calculators = $6.61538 = $6.62 per unit