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A bakery has weekly fixed costs of $600. The variable costs during one week of operation were $1800 and the output achieved was 6000 loaves. The average cost of each loaf was

Question

A bakery has weekly fixed costs of 600.Thevariablecostsduringoneweekofoperationwere600. The variable costs during one week of operation were 1800 and the output achieved was 6000 loaves. The average cost of each loaf was

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Solution

To calculate the average cost of each loaf, we need to add the fixed costs and variable costs together and then divide by the number of loaves produced.

Step 1: Add fixed costs and variable costs 600(fixedcosts)+600 (fixed costs) + 1800 (variable costs) = $2400 (total costs)

Step 2: Divide total costs by the number of loaves produced 2400(totalcosts)÷6000loaves=2400 (total costs) ÷ 6000 loaves = 0.40

So, the average cost of each loaf is $0.40.

This problem has been solved

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