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Cost types

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Consider a firm that has just built a plant, which cost $20,000. Each worker costs $5.00 per hour. Based on this information, fill in the table below.

Number of Worker Hours Output Marginal Product Fixed Cost VariableCost TotalCost MarginalCost AverageVariableCost Average Total Cost
0 0 -- 20,000 -- -- --
50 400 20,250
100 900 20,500
150 1300 20,750
200 1600 21,000
250 1800 21,250
300 1900 21,500
350 1950 21,750

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Cost types are noted.

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Marginal cost of output are additional cost incurred in producing an additional output.
Variable costs are costs which changes directly in proportion to the level of sales in dollars or units sold. For example direct material, direct labor, sales commission, bonus etc.
Fixed costs are those costs which remain the same ...

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