Question

I just need to make sure I got the correct answer. If it is wrong can you please help me get the correct answer. Step by step please.

Answer 1

A. $4.76

Explanation:

This case is fairly typical of average cost problems. There is some fixed cost that is amortized over the number of T-shirts produced, and there is some variable cost associated with each item.

Here, if you divide out the equation, you get ...

A = 4.75 + 125/x

Then for x=10,000, the value of A is ...

A = 4.75 +125/10,000 = 4.75 +0.0125 ≈ 4.76

_____

Once you see that the fixed cost of $125 is divided by 10,000, you can look for an answer choice that is very slightly higher than $4.75.

Answer 2

Explanation:

The easiest way for me to answer your question is just to do it. If we agree, all well and good. If we don't, then you have the way I did it.

A = (4.75*x + 125)/10000

A = (4.75*10000 + 125) / 10000

A = (47500 + 125) / 10000

A = 47625/10000

A = 4.76

So it looks like we both think it is A.

The question is deceptive because the 125 is really quite small compared to 47500.