Homework SourseCalculate average total cost what is the most efficient mini
Calculate average total cost, what is the most efficient (minimum ATC) output quantity given the costs below? What should be the cost to produce 900 units?
Average Total Average
Variable Step Fixed Total
Output Cost Cost Cost Cost
0 $ 0 $50,000 $500,000 _________
150 1,000 100,000 500,000 _________
300 950 100,000 500,000 _________
450 1,000 100,000 500,000 _________
600 1,200 200,000 500,000 _________
750 1,500 200,000 500,000 _________
900 1,800 300,000 500,000 _________
Solution
Solution:
The most efficent minimum ATC is $2,333.33 at output level of 450.
Total cost to produce 900 units = $2,420,000
| Output | Average Variable Cost | Variable Cost (Average Variable cost * Output) | Step Cost | Fixed Cost | Total Cost (Variable Cost + Step Cost + Fixed Cost) | Average Total Cost (Total Cost / Output) |
| 0 | $0.00 | $0.00 | $50,000.00 | $500,000.00 | $550,000.00 | Infinity |
| 150 | $1,000.00 | $150,000.00 | $100,000.00 | $500,000.00 | $750,000.00 | $5,000.00 |
| 300 | $950.00 | $285,000.00 | $100,000.00 | $500,000.00 | $885,000.00 | $2,950.00 |
| 450 | $1,000.00 | $450,000.00 | $100,000.00 | $500,000.00 | $1,050,000.00 | $2,333.33 |
| 600 | $1,200.00 | $720,000.00 | $200,000.00 | $500,000.00 | $1,420,000.00 | $2,366.67 |
| 750 | $1,500.00 | $1,125,000.00 | $200,000.00 | $500,000.00 | $1,825,000.00 | $2,433.33 |
| 900 | $1,800.00 | $1,620,000.00 | $300,000.00 | $500,000.00 | $2,420,000.00 | $2,688.89 |
