Computing Average Cost[LO3] K-Too Everwear Corporation can manufacture mountain

Question

Computing Average Cost[LO3] K-Too Everwear Corporation can manufacture mountain climbing shoes for $31.85 per pair in variable raw material costs and $22.80 per pair in variable labor expense The shoes sell for $145 per pair. Last year, production was 120,000 pairs Fixed costs were $1,750,000. What were total production costs? What is the marginal cost per pair? (Round your answer to 2 decimal places, (e.g., 32.16)) What is the average cost per pair? (Round your answer to 2 decimal places. (e.g., 32.16)) If the company is considering a one-time order for an extra 5,000 pairs, what is the minimum acceptable total revenue from the order?

Explanation / Answer

Total Variable cost per pair= 31.85 + 22.80 = $54.65 Total production cost= 1,750,000+N*54.65 = 1,750,000+120,000*54.65 =$ 8,308,000

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