Raphael's Salon has $5,000 in fixed cost and $15,000 in variable costs monthly.Raphael's Salon gives 1500 hair cuts a month.What is the average total cost for Raphael's Salon?

Question

Quizplus · Accepted Answer

The formula for average total cost is (fixed cost + variable cost) / quantity.
In this case, fixed cost = $5,000, variable cost = $15,000 and quantity = 1500.
Therefore, average total cost = (5000+ 15000)/1500 = $13.33. 
Hence, the answer is D.

Raphael's Salon Has $5,000 in Fixed Cost and $15,000 in Variable