Question
The RideEm Bicycles factory can produce 140 bicycles in a day at a total cost of $10,200 and it can produce 160 bicycles in a day at a total cost of $10,900.
What are the company's daily fixed costs?
What is the marginal cost per bicycle?(How do I find this function?)
Thank you.
What are the company's daily fixed costs?
What is the marginal cost per bicycle?(How do I find this function?)
Thank you.
Answers
20 extra bikes cost $700 more to produce. That is $35 per bike. That is the marginal cost.
When producing 140 bikes, the per-bike part of the cost is 140x35 = $4900
The "daily fixed cost" (labor/rent/overhead) is 10,200 -4900 = $5300.
When producing 140 bikes, the per-bike part of the cost is 140x35 = $4900
The "daily fixed cost" (labor/rent/overhead) is 10,200 -4900 = $5300.
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