Fellworth and Bradford Limited plans the following budget income and expenditure for the month of March 20X5: What would be the cost of producing one further unit of product?

Question

Fellworth and Bradford Limited plans the following budget income and expenditure for the month of March 20X5:  What would be the cost of producing one further unit of product?

Quizplus · Accepted Answer

To calculate the cost of producing one further unit of product, we need to calculate the marginal cost. Marginal cost is the additional cost incurred to produce one more unit of product. In this budget, we can see that the total production cost is £240,000 and the total number of units produced is 60,000. So, the average cost per unit is £240,000/60,000 = £4. Therefore, any additional unit will cost £4. Hence, the correct option is C.

Fellworth and Bradford Limited Plans the Following Budget Income and Expenditure