For manufacturing a certain item, the fixed cost is ₹6000 and the cost of producing each unit is ₹20. What is the total cost and average cost of producing 100 units?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Total Cost = ₹8000, Average Cost = ₹80
Total fixed cost = ₹6000,
variable cost of producing one unit = ₹20
∴ Total cost, $TC = ₹(6000+ 20x)$, where x is the number of units produced.
Total cost of producing 100 units = $₹(6000+ 20 × 100)=₹8000$
∴ Average cost of producing 100 units = $₹\frac{8000}{100}=₹80$