Answer to Question #183477 in Microeconomics for Bharat

Question

the smith company made and sold 10,000 metal tables last year. when output was between 5,000 and 10,000 tables, its average variable cost was $24. in this output range, each table contributed 60 percent of its revenue to fixed costs and profit. what was the price per table?

Answer 1

Variable Cost per table $ 24

Contribution towards Fixed Cost and profit 60%

Hence Contribution towards Variable Cost 40% (100 – 60)

So Selling Price of per Table 24/40*100 (Variable Cost $ / Variable cost contribution *100)

$ 60

(Selling Price = Fixed Cost + Variable Cost + Profit)