Question

Forever Quilting is a small company that makes quilting kits priced at $120 each. The costs of the materials that go into each kit are $45. It costs $5 in labor to assemble a kit. The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in quilting magazines, and $4500 for the monthly salary of its owner. Last month the company sold 150 kits. What is the total fixed cost associated with producing the quilting kits for one month

Answer 1

Answer:

Total fixed cost= $6,200

Explanation:

Giving the following information:

The company has monthly expenses of $1,000 for rent and insurance, $200 for heat and electricity, $500 for advertising in quilting magazines, and $4500 for the monthly salary of its owner.

The fixed costs do not change with production levels. Electricity can be seen as a mixed cost (variable and fixed), but we will treat it as a fixed cost.

Total fixed cost= 1,000 + 200 + 500 + 4,500

Total fixed cost= $6,200