Question

Sebastian Muffler, Inc. operates an automobile service facility. The table below shows the cost incurred during a month when 400 mufflers were replaced.

	Number of Muffler Replacements
	300		400				500
Total costs:
Fixed costs	A		$	8,400			C
Variable costs	B			5,200			D
Total costs	E		$	13,600			F
Cost per muffler replacement:
Fixed cost	G			H			I
Variable cost	J			K			L
Total cost per muffler replacement	M			N			O

Answer 1

	Number of Muffler Replacements
	300	400	500
Total costs:
Fixed costs	8400	8400	8400
Variable costs	3900	5200	6500
Total costs	12300	13600	14900
Cost per muffler replacement:
Fixed cost	28.00	21.00	16.80
Variable cost	13.00	13.00	13.00
Total cost per muffler replacement	41.00	34.00	29.80
Workings:
Unit Variable cost = 5200/400 = $13
Variable costs have been calculated by multiplying $13 by 300, 400 and 500
Fixed cost per muffler is calculated by dividing $8400 by 300, 400 and 500