A bakery spends $140 per day on fixed costs and $90 per day for labor for each employee. One employee can bake 60 cakes in a day. What is the total cost to produce 300 cakes per day?

Rationale

The total cost to produce 300 cakes per day is $590.

To calculate the total cost, we first determine the total labor cost for the employees needed to bake 300 cakes. Since one employee can bake 60 cakes in a day, we need 5 employees (300 cakes ÷ 60 cakes/employee). Therefore, the total cost is the sum of fixed costs ($140) and labor costs ($90 per employee × 5 employees = $450), leading to $590.

A (320) YOUR ANSWER

This choice underestimates the total costs by failing to account for both the fixed costs and the labor expenses. It does not include the necessary calculations for the number of employees needed to bake 300 cakes, which significantly reduces the total cost calculation.

B (290) YOUR ANSWER

This option also miscalculates by not factoring in fixed costs accurately. It suggests a labor cost that is insufficient for the number of employees required, as it does not consider the $140 in daily fixed costs, resulting in a grossly inaccurate total.

C (590) CORRECT

This is the correct calculation of total costs, as it includes the fixed costs of $140 and the labor costs for 5 employees at $90 each, which totals $450. Thus, $140 + $450 equals $590, accurately reflecting all expenses associated with producing 300 cakes.

D (1,150) YOUR ANSWER

This selection overestimates the total cost by miscalculating the labor expenses or suggesting an unrealistic number of employees or fixed costs. The inclusion of both fixed and variable costs does not lead to a figure as high as $1,150 for producing 300 cakes.

Conclusion

The accurate total cost to produce 300 cakes per day is $590, derived from a combination of fixed and labor costs. Understanding the relationship between fixed costs, variable labor expenses, and production capacity is crucial for effective budgeting in a bakery setting. The correct option reflects a thorough calculation that incorporates all necessary financial aspects.

A bakery spends $140 per day on fixed costs and $90 per day for labor for each employee. One employee can bake 60 cakes in a day. What is the total cost to produce 300 cakes per day?

The total cost to produce 300 cakes per day is $590.

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