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Total/Average Costs

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Fixed Costs: $250,000
Average Variable Costs: $10 + .01Q
Projected annual volume: 4,000 units

I. Estimate total cost and average total cost

II. Estimate effect on learning curve on Average Total Costs if actual cost was $522,500 and actual volume was 5000 units.

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1. since variable cost/quantity = average variable cost, then quantity X AVC = ...

Solution Summary

Total and average costs are examined.