Assume that ABC Bank produces product A for a corporate client, while XYZ Bank produces product B for the client.The total operating cost for producing product A is $200 000 and $300 000 for product B.The resulting business volumes for the FI are $7 500 000 for product A and $10 000 000 for product B.What is the total average cost of producing products A and B separately (round to two decimals)?

Question

Quizplus · Accepted Answer

The total average cost of producing products A and B separately is calculated as the sum of the operating costs divided by the sum of the business volumes. In this case, the total average cost is ($200,000 + $300,000) / ($7,500,000 + $10,000,000) = $500,000 / $17,500,000 = 0.02857, which rounds to 2.86%.

Assume That ABC Bank Produces Product a for a Corporate