Bob’s Burgers currently produces and sells 4000 burgers per month with the following costs:
$\begin{array}{ll}
\text { Variable costs } & \$ .50 \text { per unit } \
\text { Fixed costs } & \$ 2000
\end{array}$
Bob has recently switched food suppliers and anticipates that variable costs will decrease by $.05 per unit. In addition, Bob has renegotiated his store lease and fixed costs will be dropping by $40 per month.
-Bob anticipates selling 4200 burgers during the month of July.What will be estimated total costs during July?

Question

Bob’s Burgers currently produces and sells 4000 burgers per month with the following costs:
$\begin{array}{ll}
\text { Variable costs } & \$ .50 \text { per unit } \
\text { Fixed costs } & \$ 2000
\end{array}$ 
Bob has recently switched food suppliers and anticipates that variable costs will decrease by $.05 per unit. In addition, Bob has renegotiated his store lease and fixed costs will be dropping by $40 per month.
-Bob anticipates selling 4200 burgers during the month of July.What will be estimated total costs during July?

Quizplus · Accepted Answer

The new variable cost per unit is $0.50 - $0.05 = $0.45. The new fixed cost is $2000 - $40 = $1960. For 4200 burgers, the total variable cost is 4200 * $0.45 = $1890. The total estimated cost for July is $1890 (variable) + $1960 (fixed) = $3850.

Bob’s Burgers Currently Produces and Sells 4000 Burgers Per Month Variable costs $.50 per unit Fixed costs $2000\begin{array}{ll}\text { Variable costs } & \$ .50 \text { per unit } \\\text { Fixed costs } & \$ 2000\end{array} Variable costs Fixed costs ​$.50 per unit $2000​

Bob’s Burgers Currently Produces and Sells 4000 Burgers Per Month $\begin{array}{ll}\text { Variable costs } & \$ .50 \text { per unit } \\\text { Fixed costs } & \$ 2000\end{array}$