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Calculating fixed and variable cost

In a slow year, Deutsche Burgers will produce 2.0 million hamburgers at a total cost of $4.4 million. In a good year, it can produce 4.4 million hamburgers at a total cost of $5.0 million. What are the variable and fixed costs of hamburger production? (Enter your answers in dollars not in millions. Round "Variable cost" to 2 decimal places.)

Variable cost $ _.25__per burger
Fixed cost $ ___ what is the fixed cost

Solution Preview

Total cost = Variable cost * Quantity produced + fixed cost

We have two scenarios:
Scenario 1: Quantity produced = 2.0 million and total cost = $4.4 million
Total cost (1) = Variable cost * Quantity produced (1) + fixed cost
-> 4.4 = Variable cost * 2.0 ...

Solution Summary

The help provides details avout how to derive variable and fixed cost from cost and volume data.

$2.19