Granite Tops for You uses 15 units of capital at $5,000 per unit and employs 50 employees at a cost of $500 each. What is the company's variable cost?

Question

Quizplus · Accepted Answer

Variable cost is the cost that changes with the level of production. In this case, the only cost that changes with the level of production is the cost of employees. The cost of capital is fixed, meaning that it does not change with the level of production. Therefore, the variable cost is $500 * 50 = $25,000.

Granite Tops for You Uses 15 Units of Capital at $5,000