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    A pair of shoes that wholesales for $28.79 has the following costs:

    Manufacturing Labor 2.25
    Materials 4.95
    Factory overhead, operating expense 8.5
    Sales costs 4.5
    Advertising 2.93
    Research & Development 2
    Interest 0.33
    Net Income 3.33

    Which are variable, and which are fixed?

    If output were to rise, what would happen to average total costs, and why?

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    Solution Preview

    Hi there,
    <br>Variable costs are costs that can be varied flexibly as conditions change. They are unit costs which depends on total volume.
    <br>Fixed costs are the costs that do not vary with the number of goods produced. ...

    Solution Summary

    The expert examines the fixed or variable costs.