I'MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was

Question

Quizplus · Accepted Answer

Fixed costs = Total costs - Variable costs = $45,000 - $28,000 = $17,000. Average fixed cost = Fixed costs / Quantity = $17,000 / 7,000 = $2.43.