Firm X is producing 1000 units,selling them at $15 each.Variable costs are $3 per unit and the firm is making an accounting profit of $3000.What is the firm's total costs?

Question

​Firm X is producing 1000 units,selling them at $15 each.Variable costs are $3 per unit and the firm is making an accounting profit of $3000.What is the firm's total costs?

Quizplus · Accepted Answer

We can begin by finding the total revenue generated by the firm:
1000 units × $15 per unit = $15,000
Next, we subtract the variable costs from the total revenue to find the firm's total contribution margin:
$15,000 total revenue - ($3 variable cost per unit × 1000 units) = $12,000 total contribution margin
Finally, we add the total contribution margin to the accounting profit to find the firm's total costs:
$12,000 total contribution margin + $3,000 accounting profit = $15,000 total costs
Therefore, the correct answer is C) $12,000.

​Firm X Is Producing 1000 Units,selling Them at $15 Each

Firm X Is Producing 1000 Units,selling Them at $15 Each