# Use the following data for answering Questions 3-6:The Haverford Company is considering three types of plants to make a particular electronic device. Plant A is much more highly automated than plant B, which in turn is more highlyautomated than plant C. For each type of plant, average variable cost is constant so long as output is less than capacity, which is the maximum output of the plant. The cost structure foreach type of plant is as follows:Plant CPlant APlant BAverage Variable Costs\$1.10\$2.40\$3.70Labor1.20Materials0.901.80Other0.502.402.00\$2.50\$6.00\$7.50Total\$25,000\$300,000\$75,000Total fixed costsAnnual capacity\$50,000200,000100,000Derive the average costs of producing 100,000, 200,000, 300,000, and 400,000 devices per year with Plant A. (NOTE: for output exceeding the capacity of a single plant, assume that morethan one plant of this type is built, i.e., all inputs are duplicated in each additional plant. What are the average costs per unit for the four market output levels?a. \$5.00 \$4.00 \$4.50 \$5.00b. \$5.00 \$2.50 \$3.50 \$3.25C. \$5.00 \$7.50 \$10.00 \$12.50d.\$8.50 \$5.50 \$4.50 \$4.00O O OO

Question
Step 1

To calculate the average cost of producing 100,000 , 200,000 , 300,000 and 400,000 devices in a  year.

Step 2

Total cost refers to the expenses that are incurred in the production of goods and services. It has two main components: Total Fixed Cost (TFC) and Total Variable Cost (TVC).

Average Cost can be calculated by dividing total cost with the number of units produced.

Step 3

Total cost of producing 100,000 devices per year with plant A will be equal to the summation of TVC (250000) AND TFC (3...

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