A business incurs the following costs per unit: Labor $125/unit;Materials $45/unit and rent $250,000/month.If the firm produces 1,000,000 units a month,the total costs equal

Question

​A business incurs the following costs per unit: Labor $125/unit;Materials $45/unit and rent $250,000/month.If the firm produces 1,000,000 units a month,the total costs equal

Quizplus · Accepted Answer

The total costs equal the sum of variable costs (labor and materials per unit multiplied by the number of units) plus fixed costs (rent). Labor cost per unit is $125 and material cost per unit is $45, so the total variable cost per unit is $170. For 1,000,000 units, the total variable cost is $170 * 1,000,000 = $170,000,000. Adding the fixed cost of rent, $250,000, gives a total cost of $170,000,000 + $250,000 = $170,250,000.

​A Business Incurs the Following Costs Per Unit: Labor $125/unit;Materials

A Business Incurs the Following Costs Per Unit: Labor $125/unit;Materials