A college "marketing club" printed 1,000 "We're Number 1" bumper stickers for sale at $3.00 each as a fund-raiser. Its fixed costs were $500, and the variable cost for each sticker was $.50. The club's average cost was:

Question

Quizplus · Accepted Answer

The average cost is calculated by adding the total fixed costs to the total variable costs and then dividing by the number of units produced. Here, the total cost is $500 (fixed) + $500 (variable for 1,000 stickers at $0.50 each) = $1,000. Dividing by 1,000 stickers gives an average cost of $1.00 per sticker.

A College "Marketing Club" Printed 1,000 "We're Number 1" Bumper