If total fixed costs are $1,000,variable costs are constant at $5.00 per unit over the relevant range of output and average total cost is $6,what is total variable cost?
A)$100
B)$1,000
C)$5,000
D)$6,000

Question

Quizplus · Accepted Answer

To find the total variable cost, we need to determine the number of units produced. Average total cost (ATC) is given by the formula: ATC = (Total Fixed Costs + Total Variable Costs) / Quantity. Here, ATC is $6, and Total Fixed Costs are $1,000. Let Q be the quantity. So, $6 = ($1,000 + $5Q) / Q. Solving for Q gives Q = 1,000 units. Therefore, Total Variable Cost = $5 * 1,000 = $5,000.

If Total Fixed Costs Are $1,000,variable Costs Are Constant at $5.00