Question

Adams Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 10,000 and 16,000 trophies per year. The following cost data apply to various activity levels:

Required Complete the preceding table by filling in the missing amounts for the levels of activity shown in the first row of the table. (Round "Cost per unit" answers to 2 decimal places.)
Number of Trophies 6,000 8,000 10,000 12,000
Total costs incurred
Fixed
Variable
Total costs $ 76,000 42,000 118,000 $ $ 0 $ 0 $ 0
Cost per unit $ 12.67
Fixed Variable
Total cost per trophy 7.00 $ 19.67 $ 0.00 $ 0.00 $ 0.00

Answer 1

Total costs in businesses, which include fixed and variable components, are crucial for determining cost per unit and identifying the profit-maximizing output level, which can be analyzed through calculations and graph representations.

Step-by-step explanation:

When considering the costs incurred in the production of goods such as trophies or aquariums by businesses like Adams Trophies and AAA Aquarium Co., total costs consist of both fixed costs and variable costs. Fixed costs are expenses that do not change with the level of output, such as rent for space and equipment, while variable costs fluctuate based on the number of units produced, like materials for trophies or labor hired. To calculate the total cost for any given level of output, we simply add the fixed costs to the variable costs. Additionally, understanding the cost per unit, total revenue, marginal revenue, total cost, and marginal cost are key to identifying the profit-maximizing quantity of output for a business.

Using provided cost data and output levels, you can calculate missing information, like cost per unit at various production quantities, by dividing total costs by the number of units produced. Graphs can also be utilized to visually represent these costs and revenues, helping determine the most profitable levels of production.

Answer 2

Number of Trophies 6,000 8,000 10,000 12,000

Total costs incurred

Fixed 76,000. 76,000 76,000 76,000

Variable 42,000 56,000 70,000 84,000

Total costs 118,000 132,000 146,000 160,000

Cost per unit 12.67 9.50 7.60 6.33

Fixed Variable 7.00 7.00 7.00 7.00

Total cost per trophy 19.67 16.50 14.60 13.33

Step-by-step explanation:

Calculation to Complete the preceding table by filling in the missing amounts for the levels of activity shown in the first row of the table

Number of Trophies 6,000 8,000 10,000 12,000

Total costs incurred

Fixed 76,000 76,000 76,000 76,000

Variable 42,000 56,000 70,000 84,000

Total costs 118,000 132,000 146,000 160,000

Cost per unit 12.67 9.50 7.60 6.33

Fixed Variable 7.00 7.00 7.00 7.00

Total cost per trophy 19.67 16.50 14.60 13.33

Fixed Cost =76,000

Variable cost per unit =42,000/6,000 units=7 per units

Variable cost per unit =8,000 units×$7 =$56,000

Variable cost per unit=10,000 units×$7=$70,000

Variable cost per unit=12,000 units× $7=$84,000

Total Cost =Fixed cost + Variable cost

Cost per unit=Fixed cost/Number of units

8,000 units=76,000/8,000=$9.50

10,000 units=76,000/10,000=$7.60

12,000 units=76,000/12,000=$6.33

Fixed Variable=42,000/6,000 units=7 per units

Total cost per trophy =Cost per units + Fixed variable