What is the variable cost of producing each racing bicycle

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Reference no: EM131292091

Tour Racing Bicycles, Inc. has gathered the following cost and activity level information:

Average total cost per unit $250.00

Production level used to calculate average cost 1,000

Total fixed costs $75,000

a. What is the total cost of producing 1,000 racing bicycles? ____________________

b. What is the variable cost of producing each racing bicycle? ____________________

c. Suppose the company uses the average cost of $250 to predict total costs. What total cost would the company calculate for 2,500 racing bicycles? ________________________

d. If the company uses the cost equation to predict total costs, what total cost would the company calculate for 2,500 racing bicycles? _____________________

e. Is there a difference between the forecasted total cost using average cost versus the cost equation for production of 2,500 racing bicycles? If there is a difference, which is the more accurate projection, and why?

Reference no: EM131292091

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