Question

Simon and Garfunkel operate separate, but related, businesses in the same town. The two have been debating which of them has the least amount of fixed costs. Simon, because he has always come first, believes his business has lower fixed costs than Garfunkel’s business. Of course, Garfunkel disagrees, saying that his business has lower fixed costs. The two have accumulated the following activity and cost data and have asked that you help them resolve their debate.


Required
A. Classify each of Simon’s and Garfunkel’s expenses as a fixed, variable, or mixed cost.
B. Calculate the total cost formula for each business. Which business has lower fixed costs?
C. If Simon produces 1,300 units, what would his total costs be?
D. If Garfunkel produces 9,000 units, what would his total costsbe?


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  • CreatedMarch 11, 2015
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