The Easy Rider Surfboard Company produces 11,000 surfboards annually at a total cost of $484,000.Its total fixed costs are $198,000.The average variable cost of a surfboard must be

Question

Quizplus · Accepted Answer

We can use the formula:
Total Cost = Total Fixed Cost + (Average Variable Cost x Quantity)

$484,000 = $198,000 + (Average Variable Cost x 11,000)

$286,000 = Average Variable Cost x 11,000

Average Variable Cost = $286,000 / 11,000 = $26

Therefore, the average variable cost of a surfboard is $26. So the best choice(s) is B.

The Easy Rider Surfboard Company Produces 11,000 Surfboards Annually at a Total