Farm Supply plans to make 10,000 tractors at its plant.Fixed costs are $1,000,000 and variable costs are $500 per tractor.What is the average cost per tractor?

Question

Quizplus · Accepted Answer

The average cost per tractor is calculated by adding the total fixed costs to the total variable costs and then dividing by the number of tractors. Total costs = $1,000,000 + ($500 * 10,000) = $6,000,000. Average cost per tractor = $6,000,000 / 10,000 = $600.

Farm Supply Plans to Make 10,000 Tractors at Its Plant