Question - The controller for Truman Canoes has gathered the following cost and activity level information:
Average total cost per unit - $300.00
Production level used to calculate average cost - 2,000
Total fixed costs - $100,000
Required:
1. What is the total cost of producing 2,000 fiberglass canoes?
2. What is the variable cost of producing each fiberglass canoe?
3. Suppose the controller uses the average cost to predict total costs. What total cost would the controller calculate for 3,000 fiberglass canoes?
4. If the controller uses the cost equation to predict total costs, what total cost would the controller calculate for 3,000 fiberglass canoes?