A firm produces 50 units each week - Leaving Cert Economics - Question 4 - 2016
Question 4
A firm produces 50 units each week. It receives €50,000 in total from the sale of these 50 units.
The firm pays the following costs:
Wages: €5,000; Raw Materials: €2... show full transcript
Worked Solution & Example Answer:A firm produces 50 units each week - Leaving Cert Economics - Question 4 - 2016
Step 1
Total cost of producing 50 units.
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Answer
To calculate the total cost of producing 50 units, add all the individual costs:
Wages: €5,000
Raw Materials: €25,000
Light & Heat: €3,000
Rent of Premises: €7,000
The total cost is:
extTotalCost=€5,000+€25,000+€3,000+€7,000=€40,000
Step 2
Profit made on sales.
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Answer
To find the profit made on sales, subtract the total cost from the total revenue:
Total revenue from sales: €50,000
Total cost: €40,000
The profit is:
extProfit=€50,000−€40,000=€10,000
Step 3
Cost of producing one unit (average cost).
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Answer
To calculate the cost of producing one unit, divide the total cost by the number of units produced:
Total cost: €40,000
Number of units: 50
The cost of producing one unit is:
ext{Average Cost} = rac{€40,000}{50} = €800
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