Product and Cost

Abstract

Our class assignment this week asks us to analyze four different formulas that have a total fixed cost of $1 Million. The five listed formulas are as follows; the total variable cost, average variable cost, average total cost and worker productivity. We are to analyze the same variables but instead of using $1 Million, the formula is asking for the total fixed cost to be $3 Million in these calculations. The calculations will be put into a report which will then be given to management for review.

Product and Cost

For this assignment we were given formulas to calculate a variety of variable costs. No matter what uniqueness of the firms; their size large or small, how reputable or unknown or even how well known their market appearance, firms have to establish their operations on a collection of different business strategies. They must be familiar with supply and demand, as well as, all the costs involved in operating an organization.

Here are the formulas that will determine the values of each variable:

Total variable cost = (number of workers * workers daily wage) + other variable costs

Avg. variable cost = total variable cost / units of output per day

Avg. total cost = (total variable cost + total fixed cost) / units of output per day

Worker productivity = units of output per day / # of workers

In the first equation I will calculate the given variables into the given formulas and find the solutions.

Total fixed cost = $ 1 Million

$4.4 Million = (50,000 * 80) + 400,000

$22= 4,400,000 / 200,000

$27= 4,400,000 + 1,000,000 / 200,000

4= 200,000 / 50,000

The profit and loss is determined by the listed variables: