Purchase Solution

Calculate Average Variable Cost using Average Total cost

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Find average variable cost of 3,000,000 pairs of shoes
Is the answer \$16.00? I got that answer by multipling the ATC (\$20.00) by the percent of variable cost (80%)
Athletic Shoe Production

Normal Profit \$6.00
Leather costs \$2.00
Rubber costs \$3.50
Metal costs \$ .50
Cotton costs \$3.00
Assembly \$5.00
Total: \$20.00 This is the lowest possible cost for the production of a single pair of shoes.
It is also the Average total cost (ATC) of the profit maximizing or loss minimizing quantity of
shoes: 3,000,000

Plant & Equipment 20% if total assembly cost (not ATC)
Labor 80% of total assembly cost (not ATC)

Solution Preview

I don't think this answer is right.
<br>Just like posting 16788, the ATC is calculated to be \$20
<br>However, we notice that the Fixed ...

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