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 1800 and the output achieved was 6000 loaves. The average cost of each loaf was
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 1800 (variable costs) = $2400 (total costs)
Step 2: Divide total costs by the number of loaves produced 0.40
So, the average cost of each loaf is $0.40.
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