Iowa Enterprises had an average cost of $10.75 during a month when 50,000 units were produced. When production doubled several months later, the average cost dropped to $8.25.
Required:
(a.) Determine the fixed and variable portions of production costs.
(b.) What will unit cost be when production equals 80,000 units?

Question

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The Answer of Iowa Enterprises had an average cost of $10.75 during a month when 50,000 units were produced. When production doubled several months later, the average cost dropped to $8.25.
Required:
(a.) Determine the fixed and variable portions of production costs.
(b.) What will unit cost be when production equals 80,000 units?

Iowa Enterprises Had an Average Cost of $10