Use the following to answer question:
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 2 mixers and bakes 200 cakes per day,what is her average total cost?
A)$8
B)$14.50
C)$1,492
D)$1,508

Question

Use the following to answer question: 
-(Table: Cakes)Use Table: Cakes.Pat is opening a bakery to make and sell special birthday cakes.She is trying to decide how many mixers to purchase.Her estimated fixed and average variable costs if she purchases 1,2,or 3 mixers are shown in the table.Assume that average variable costs do not vary with the quantity of output.If Pat purchases 2 mixers and bakes 200 cakes per day,what is her average total cost?
A)$8 
B)$14.50 
C)$1,492 
D)$1,508

Quizplus · Accepted Answer

According to the table, if Pat purchases 2 mixers, her estimated fixed cost is $90 per day and her average variable cost is $0.85 per cake. Therefore, her total cost for baking 200 cakes per day would be:

Total cost = Fixed cost + (Average variable cost x Quantity)
Total cost = $90 + ($0.85 x 200)
Total cost = $90 + $170
Total cost = $260

Average total cost is calculated by dividing total cost by quantity:

Average total cost = Total cost ÷ Quantity
Average total cost = $260 ÷ 200
Average total cost = $1.30 per cake

Therefore, the best choice for Pat is to purchase 2 mixers, as it has the lowest average total cost of $1.30 per cake.

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