Last year a business had fixed costs of £875,000 and revenue of 2.5 million. The business had total variable coats of 50,000 and sold 100,000 units. Calculate the total costs of the business last year

Total cost of the business = £925,000

Explanation:

Solution:

Data given:

Fixed cost = £875000

Revenue generated = 2.5 million

Total variable cost = 50,000

Units Sold = 100,000

What is the total cost of the business = ?

Formula for total cost of the business is:

Total Cost = Total Fixed Cost + (Average variable cost per unit x units produced)

Here we have, Total variable cost not the average variable cost per unit.

So,

Average variable cost per unit = Total variable cost/ units produced

Average variable cost per unit = 50,000/100,000

Average variable cost per unit = 1/2 = £0.5 per unit.

Now,

Total cost of the business = Total Fixed Cost + (Average variable cost per unit x units produced)

Let's plug in the values.

Total cost of the business = 875,000 + (0.5 x 100,000)

Total cost of the business = £925,000

typically a loft will include modern kitchen and bathrooms, this increases the price tag. lofts also have a good amount of open space, this requires more heating and electricity. lofts are also in older buildings, this means that maintaining the location increases the bill. keep in mind this is without talking about the high state and property taxes.

i hope this you! : )