The St. Thomas Winery plans to open a new production facility in the Napa Valley of California. Based on information provided by the accounting department, the company estimates fixed costs of $250,000 per year and average variable costs of:
AVC=$10 +0.01Q
where AVC is average variable cost (in dollars) and Q is output measured in cases of output per year.
Estimate total cost and average total cost for the comping year at a projected volume of 4,000 cases.