Feathered Nests produces decorative birdhouses.The company's average cost per unit is $20.00 when it produces 2,000 birdhouses.If $4,800 of the costs are fixed,and the plant manager uses the average cost per unit to predict total costs,his forecast for 2,200 birdhouses will be:

Question

Quizplus · Accepted Answer

The correct answer is A because the total cost is the sum of the fixed costs and the variable costs. The variable costs are equal to the average cost per unit multiplied by the number of units produced. In this case, the fixed costs are $4,800 and the average cost per unit is $20.00. Therefore, the total cost for 2,200 birdhouses is $4,800 + (2,200 * $20.00) = $44,000.

Feathered Nests Produces Decorative Birdhouses