Taylor Chemicals produces a particular chemical at a fixed cost of $ 1,000 per day. The following
Question:
Taylor Chemicals produces a particular chemical at a fixed cost of $ 1,000 per day. The following table displays how marginal cost varies with output (in cases):
Quantity (Cases) Marginal Cost
1………………………….. $ 500
2………………………….. 400
3………………………….. 325
4………………………….. 275
5………………………….. 325
6………………………….. 400
7 ………………………….. 500
8………………………….. 625
9 ………………………….. 775
10………………………….. 950
Required:
a. Given the preceding data, construct a table that reports total cost and average cost at various output levels from 1 to 10 cases.
b. At what quantity is average cost minimized?
c. Does marginal cost always intersect average cost at minimum average cost? Why?
Step by Step Answer:
Accounting for Decision Making and Control
ISBN: 978-0078025747
8th edition
Authors: Jerold Zimmerman