Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.2

Question

Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30 cents per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50 cents per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy enters a recession, the total manufacturing costs for Firm C will be what?

Explanation / Answer

Answer:$1350000

Manufacturing cost= 2,000,000(.30) + $750,000 = $1,350,000

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