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15 May, 11:10

If the Clearwater Cotton Candy Company hypothetically lays off its workers and shuts down, it incurs costs of $30,000. If it produces at full capacity, it incurs costs of $90,000. One would conclude that:

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  1. 15 May, 13:48
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    The costs of variable inputs at full capacity is $60,000.

    Explanation:

    Given:

    After shut down cost = $30,000

    Total cost on full capacity = $90,000

    We know that workers and labor are including in variable cost, in this situation when workers got shut down by the company. The company's total cost will incur $30,000.

    So, We say that $30,000 is fixed cost of the company

    So, Total cost = Total Variable cost + Total fixed cost

    $90,000 = Total Variable cost + $30,000

    Total Variable cost = $60,000
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