21st Century Pen Inc. produces 2000 pens per day, and hires 20 workers at a cost

ID: 1181524 • Letter: 2

Question

21st Century Pen Inc. produces 2000 pens per day, and hires 20 workers at a cost of $200 per day per worker.

The price of each pen is $5 each. 21st Century Pen Inc. pays a daily rental rate of $60 on its factory and a daily insurance

rate of $20. 21st Century Pen Inc. has a ten year lease on the factory and insurance contract for a year, the company has no

other expenses.

Century Pen Inc.'s average total cost at an output of 2000 pens per day is approximately:

A) $2 per unit.

B) $2 .01 per unit.

C) $2 .03 per unit.

D) $2 .04 per unit.

Hi,

Please find the answer as follows:

Average Total Cost = (20*200 + 60 + 20)/2000 = 2.04

Option D is correct.

Thanks.

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.