Feathered Nests produces decorative birdhouses. The company’s average total cost

Question

Feathered Nests produces decorative birdhouses. The company’s average total cost per unit is $22 when it produces 2,000 birdhouses. If $4789 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, his forecast for producing 2248 birdhouses will be:

Input your number without dollar signs or commas. Round your final answer to the nearest whole number. DO NOT round any numbers in doing your calculations (especially your variable cost per unit) other than your final answer.

Explanation / Answer

For 2000 Birdhouse-

Total Cost = $22 per unit @ 2000 = $44000

(-) Fixed Cost = ($4789)   

Variable Cost = $39211

Variable Cost Per Unit = $39211/2000 = $19.6055

For 2248 Birdhouse -

Variable Cost = $19.6055 @2248 birdhouse = $44073.164

+ Fixed Cost = $4789   

Total Cost = 48862.164

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