Question

Meat​ Packers, Incorporated​ (MPI) preserves and packages various kinds of meats for transportation to grocery stores. To prepare and transport each meat package to a grocery​ store, the firm must purchase ​$60 in raw meat and pay ​$90 in wages for labor and ​$40 in fuel costs. In​ addition, the firm rents a factory for ​$16,000 per month and makes ​$9,000 in monthly payments on meat packaging equipment. Suppose the firm prepares and transports 1,000 packages of meat per month. What are the​ firm's fixed and variable costs of production in a given​ month?

The​ firm's fixed cost of production is ​$___, and its variable cost of production is ​$___ . ​(Enter numeric responses using​ integers.)

Answer 1

firm's fixed cost of production is ​$25,000, and its variable cost of production is ​$190,000

Explanation:-

Compute Monthly Fixed Cost

Rent_monthly = $16,000

Packaging Equipment_monthly = $9,000

Total Fixed Costmonthly = Rent_monthly + Packaging Equipment_monthly = $16,000 + $9,000 = $25,000

Compute Monthly Variable Cost

Raw meat_1package = ​$60

Labor wage_1package = $90

Fuel_1package = .$40

Variable Cost_1package = Raw meat_1package + Labor wage_1package + Fuel_1package = $60 + $90 $40 = $190

Total Number of packages transported in one month = 1,000

Total Variable Cost₁₀₀₀package = 1,000 * Variable Cost_1package = 1,000 * $190 = $190,000

Monthly Fixed Cost of production is $25,000

Monthly Variable Cost of production is is $190,000