A. Create an original cost structure exercise/problem for your peers to answer
B. An automotive repair shop has a fixed operating cost of $2,500 per day. The variable cost per repair is $225.
If the auto shop completes 6,000 repairs in the year:
What are the expected total costs?
What are the total costs if they complete only 3,500 repairs?
What if they complete 8,000 repairs?
What is the average cost per repair for 3,500, 6,000, and 8,000 completed repairs?
C. Orchid Corporation is a flower distributor that has been very profitable for more than a decade. Last year the company did not see the same type of profit results as in previous years and wanted to do a cost structure analysis for which they have asked us to help. Using the table below, identify the total cost, variable cost and the marginal cost for this business. The quantity distributed is 200 flower units per employee.
|
Number of Employees
|
Quantity Distributed
|
Fixed Costs
|
Variable Costs
|
Total Costs
|
Marginal Costs
|
|
0
|
0
|
$5,000
|
|
|
|
|
1
|
200
|
$5,000
|
|
|
|
|
2
|
|
$5,000
|
|
|
|
|
3
|
|
$5,000
|
|
|
|
|
4
|
|
$5,000
|
|
|
|
|
5
|
|
$5,000
|
|
|
|