Question

A firm produces 200 units hourly with $150 in labor costs an hour, $80 in materials costs an hour, and a fixed cost that works out to $20 per hour. First, what are this firm's hourly variable and total costs

Answer 1

$230

$250

Step-by-step explanation:

Variable costs are costs that vary with production

variable cost = labour costs + cost of raw materials

150 + 80 = 230

total cost = fixed cost + variable costs

Fixed costs are costs that do not vary with output. e,g, rent, mortgage payments

230 + 20 = 250