Question
Asked Jul 19, 2019
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Cost Relationships The following costs are for Optical View Inc., a contact lens manufacturer:

 

Required

  1. Calculate and graph total costs, the total variable cost, and total fixed cost.

  2. For each level of output calculate the per-unit total cost, per-unit variable cost, and per-unit fixed cost.

  3. Using the results from requirement 2, graph the per-unit total cost, per-unit variable cost, and per-unit fixed cost, and discuss the behavior of the per-unit costs over the given output levels.

 

Output in Units
Fixed Costs
Variable Costs
Total Costs
$ 7,500
9,000
10,500
12,000
$4,750
$12,250
13,750
15,250
16,750
250
300
4,750
350
4,750
4,750
400
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Output in Units Fixed Costs Variable Costs Total Costs $ 7,500 9,000 10,500 12,000 $4,750 $12,250 13,750 15,250 16,750 250 300 4,750 350 4,750 4,750 400

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Expert Answer

Step 1

Total Cost of production includes both fixed cost and variable costs. Variable costs are those which vary with each level of output and fixed costs remain fixed over a period of time and are independent of the production level.

Step 2

The units produced have been plotted on x axis and costs on the y-axis.The blue line denotes the variable cost curve, black line, fixed cost and red total fixed costs.

Step 3

2.

...

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