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in november, trinity donuts incurred $8850 in total costs related to the production of 3500 donuts. in december, trinity incurred $8600 in total costs. total fixed costs are $1850 per month. by how many donuts did the production change? (answer as a negative number if production has decreased).

Respuesta :

ayune

The change of production unit is -125 as the production decreased from 3500 units to 3375 units.

Total cost = variable cost + fixed cost

While:

Variable cost = number of units x cost per unit.

The given parameters:

number of units (November) = 3500 donuts

fixed cost = $1850

total cost (November) = $8850

Hence,

November variable cost = total cost - fixed cost

                                        = $8850 - $1850

                                        = $7000

3500 x cost per unit donut = $7000

Cost per unit donut = $7000 / 3500 = $2

In December:

Total cost = $8600

December variable cost = total cost - fixed cost

                                        = $8600 - $1850

                                        = $6750

number of units  x $2 =  $6750

number of units  =  6750 / 2 = 3375 donuts

Hence, the change of production is 3375 - 3500 = -125

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