Litten Inc. bought 5 boxes of kitten litter for $10 each. If each box consists of 20 packages, how much does each package cost?
5 boxes x $10 = $50 5 boxes x 20 packages/box = 100 packages total 100 packages/$50 = $2/package
Sweep Inc. provides multiple cleaning services. The service requires a $40 variable cost for materials. Labor and administrative support, which is the fixed cost is $120,000 per year. Sweep Inc provides about 200 services a month. What is the average cost per service?
VC = $40 FC = $120,000/year Quantity = 200/month aka 2400/year Total Cost = $120,000 + ($40 x $2400) Total Cost = $216,000 TC/Q = cost per service $216,000/2400 = $90/service