A factory producing motorcycle helmets employs six workers. At the current production level, each worker produces 20 helmets per week. Assuming that labor is the only variable input and that the weekly wage equals $600 per week, average variable cost:

Question

A factory producing motorcycle helmets employs six workers. At the current production level, each worker produces 20 helmets per week. Assuming that labor is the only variable input and that the weekly wage equals $600 per week, average variable cost:

a.) equals $600 per helmet.
b.) equals $30 per helmet.
c.) equals $100 per helmet.
d.) equals $20 per helmet.
e.) cannot be determined with info. given

Answer 1

To calculate the average variable cost, we need to divide the total variable cost by the total number of helmets produced. The total variable cost is the total wages paid to the workers.

Given that there are six workers and each worker produces 20 helmets per week, the total number of helmets produced per week is 6 x 20 = 120 helmets.

The total wages paid to the workers per week is $600 x 6 = $3600.

Therefore, the average variable cost per helmet is $3600 ÷ 120 = $30.

Therefore, the correct answer is b.) equals $30 per helmet.

A factory producing motorcycle helmets employs six workers. At the current production level, each worker produces 20 helmets per week. Assuming that labor is the only variable input and that the weekly wage equals $600 per week, average variable cost:

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To calculate the average variable cost, we need to divide the total variable cost by the total number of helmets produced. The total variable cost is the total wages paid to the workers.