Question

1. Brell Corporation manufactures umbrellas. The cloth used in one umbrella costs $ 15. The corporation rents a manufacturing factory for a monthly rent of $ 275. Prepare a table showing the Total Fixed Cost, Total Variable cost, Total Cost and Average Fixed Cost, Average Variable Cost, and Average Cost for three different levels of production. (No. of units at three different levels can be chosen by you).

Answer 1

Within the relevant range, variable cost per unit remains constant while fixed costs in total remain constant
Units	200	400	600
Total costs
Variable costs	3,000	6,000	9,000
Fixed costs per year	275	275	275
Total costs	3,275	6,275	9,275
Average cost
Average Variable cost	15	15	15
Average Fixed cost	1.38	0.69	0.46
Average Total cost	16.38	15.69	15.46