Reconsider Wimpy's Burgers from problem l. In a slow year, Wimpy's Burgers will produce 1 million hamburgers
Question:
In a slow year, Wimpy's Burgers will produce 1 million hamburgers at a total cost of $1.75 million. In a good year, it can produce 2 million hamburgers at a total cost of $2.25 million. What are the fixed and variable costs of hamburger production?
a. What is the average cost per burger when the firm produces 1 million hamburgers?
b. What is average cost when the firm produces 2 million hamburgers?
c. Why is average cost lower when more burgers are produced?
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
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