A business incurs the following costs per unit: Labor - $125/unit;Materials $45/unit and rent - $25000/month.If the firm produces 1,000,000 units a month,the total costs equal

Question

Quizplus · Accepted Answer

To calculate the total cost incurred by the business in a month, we need to first calculate the total cost per unit.
Total cost per unit = Labor cost per unit + Materials cost per unit + Rent per unit
Total cost per unit = $125 + $45 + ($25000/1000000) [as given, the firm produces 1,000,000 units a month]
Total cost per unit = $170
So, the total cost incurred by the firm in a month would be:
Total cost = Total cost per unit * Number of units produced
Total cost = $170 * 1000000
Total cost = $170,000,000
Hence, the correct answer is option B.

A Business Incurs the Following Costs Per Unit: Labor -