Fein Corp. manufactures food processors, each containing $20 of variable costs. Fein's fixed costs are $1,200,000, spread evenly throughout the year. If Fein expects to produces 20,000 food processors in May, what is Fein's total expected cost for the month?

Question

Quizplus · Accepted Answer

The total expected cost for May includes both variable and fixed costs. Variable costs are $20 per unit, so for 20,000 units, the variable cost is $400,000. The fixed costs for the month are $1,200,000 / 12 = $100,000. Therefore, the total expected cost is $400,000 + $100,000 = $500,000.

Fein Corp Manufactures Food Processors, Each Containing $20 of Variable Costs