A firm produces 1000 units per week.It hires 10 full-time workers (40 hours/week)at an hourly wage of $20.Raw materials are ordered weekly and they costs $5 for every unit produced.The weekly cost of the rent payment for the factory is $1,500.How do the overall costs breakdown for the week?
A)total variable cost is $5,000;total fixed cost is $1,500;total cost is $6,500
B)total variable cost is $5,000;total fixed cost is $9,500;total cost is $14,500
C)total variable cost is $13,000;total fixed cost is $1,500;total cost is $14,500
D)total variable cost is $13,000;total fixed cost is $9,500;total cost is $22,500

Question

Quizplus · Accepted Answer

The total variable cost includes labor ($20/hour * 40 hours/week * 10 workers = $8,000) and raw materials ($5/unit * 1000 units = $5,000), totaling $13,000. The total fixed cost is the rent, which is $1,500. Therefore, the total cost is $13,000 + $1,500 = $14,500.

A Firm Produces 1000 Units Per Week