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Chloe’s Cafe bakes croissants that it sells to local restaurants and grocery stores. The average costs to bake the croissants are $0.80 for 2,800 and $0.75 for 5,600. Required: If the total cost function for croissants is linear, what will be the average cost to bake 4,800?

Respuesta :

abiolataiwo2015

What will be the average cost to bake 4,800 is $0.76

First step is to determine the total cost

Total cost at 2,800

=$0.80 ×2,800

=$2,240

Total cost at 5,600

=$0.75 × 5,600

=$4,200

Second step is to determine the Variable cost per unit

Variable cost per unit=$4,200-$2,240

Variable cost per unit=$1,960

Variable cost per unit=5,600-2,800

Variable cost per unit=2,800

Variable cost per unit=$1,960/2,800

Variable cost per unit=$0.70

Now let determine the average cost

Average cost=$0.70×4,800+[($0.80×2800)-(2,800 ×$0.70)]

Average cost=$3,360+($2,240-$1,960)

Average cost=$3,360+$280

Average cost=$3,640

Average cost =$3,640/4,800

Average cost=$0.76

Inconclusion What will be the average cost to bake 4,800 is $0.76

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