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    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)

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    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 ...