Answer:
The average total cost for the 30th unit of production created is:
= $420.
Explanation:
a) Data and Calculations:
Wage rate per unit = $20
Capital rental rate per unit of capital = $200
Units of capital per unit = 2
Capital rental rate per unit of product = $400 ($200 * 2)
Total cost for each unit of production = $420 ($400 + $20)
b) More capital is consumed by the production of this product. The production is capital-intensive while labor is very cheap. To product a unit, the company will incur $20 in labor and $400 in capital. The total unit cost is $420 (cost of labor and capital per unit)
The average total cost for the 30th unit of production created is $420
Average Total Cost refers to the combination of all fixed and variable costs per unit in producing a product.
Given the above information, the
Total cost for each unit of production
= $420 ($400 + $20)
The above means that more capital is consumed by the production of this product. Also, the production is capital-intensive while labor is very cheap.
To produce a unit, the company will incur $20 in labor and $400 in capital. The total unit cost is $420 (cost of labor and capital per unit)
Hence, the average total cost for the 30th unit of production created is $420
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