Solving A Numerical On Concepts Of Costs

349 words - 2 pages

Solving a Numerical on Concepts of Costs
Given the quantity and total fixed and variable costs, calculate the remaining costs to complete the following table:
Units of Output (Q) | TFC | TVC | TC | AFC | AVC | AC | MC |
0 | 100 | 0 | 100 | N/A | N/A | N/A | 5 |
10 | 100 | 50 | 150 | 10 | 5 | 15 | 3 |
20 | 100 | 80 | 180 | 5 | 4 | 9 | 2.3 |
30 | 100 | 103 | 203 | 3.33 | 3.43 | 6.76 | 1.7 |
40 | 100 | 120 | 220 | 2.5 | 3 | 5.5 | 3 |
50 | 100 | 150 | 250 | 2 | 3 | 5 | 5 |
60 | 100 | 200 | ...view middle of the document...

33

AFC40 = 100/40 = 2.5
AFC50 = 100/50 = 2
AFC60 = 100/60 = 1.67
AFC70 = 100/70 = 1.43

AVC = TVC/Q
AVC0 = 0/0 = Cannot divide by Zero
AVC10 = 50/10 = 5
AVC20 = 80/20 = 4
AVC30 = 103/30 = 3.43
AVC40 = 120/40 = 3
AVC50 = 150/50 = 3
AVC60 = 200/60 = 3.33
AVC70 = 350/70 = 5

AC = AFC + AVC
AC0 = N/A + N/A = N/A
AC10 = 10 + 5 = 15
AC20 = 5 + 4 = 9
AC30 = 3.33 + 3.43 = 6.76
AC40 = 2.5 + 3 = 5.5
AC50 = 2 + 3 = 5
AC60 = 1.67 + 3.33 = 5
AC70 = 1.43 + 5 = 6.43

MC = ∆TVC/∆Q
MC0 = (50 – 0)/(10 – 0) = 5
MC10 = (80 – 50)/(20 – 10) = 3
MC20 = (103 – 80)/(30 – 20) = 2.3
MC30 = (120 – 103)/(40 – 30) = 1.7
MC40 = (150 – 120)/(50 – 40) = 3
MC50 = (200 – 150)/(60 – 50) = 5
MC60 = (350 – 200)/(70 – 60) = 15

Reference
Keat, P. G., & Young, P. K. (2009). Managerial economics: Economic tools for today's decision makers. Upper Saddle River, N.J: Prentice Hall.

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