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29 October, 11:07

The RideEm Bicycles factory can produce 110 bicycles in a day at a total cost of $10,900 and it can produce 130 bicycles in a day at a total cost of $11,600. What are the company's daily fixed costs?

What is the marginal cost per bicycle?

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  1. 29 October, 13:34
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    C - fixed costs; b - costs per bicycle;

    c + 110 b = 10,900

    c + 130 b = 11,600

    c = 10,900 - 110 b

    10,900 - 110 b + 130 b = 11,600

    20 b = 700

    b = 700 : 20 = $35

    c + 110 * 35 = 10,900

    c + 3,850 = 10,900

    c = 10,900 - 3,850

    c = $7,050 (daily fixed costs)

    Marginal cost is the cost of producing one more unit of goods (one more bicycle).

    Answer:

    The company's daily fixed cost is $7,050.

    The marginal cost per bicycle is $35.
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