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

Total cost to produce 300 cakes per day is $590.

To determine the total cost for producing 300 cakes, we must factor in both the fixed costs and the variable costs associated with labor and production. The bakery incurs fixed costs of $140 and labor costs depending on the number of employees needed to bake the cakes.

A ($320) YOUR ANSWER

This option does not account for the necessary labor costs to produce 300 cakes. While it may suggest a minimal expense, the bakery has fixed costs of $140, which already exceeds this choice. Therefore, this answer cannot reflect the true total cost.

B ($230) YOUR ANSWER

Similar to option A, this choice fails to include the labor costs adequately. The fixed costs alone surpass this figure, and even if it were meant to represent variable costs, it overlooks the necessary calculations for employee labor to produce the cakes.

C ($590) CORRECT

This is the correct calculation. The bakery spends $140 on fixed costs and requires 5 employees to bake 300 cakes (since one employee bakes 60 cakes per day). Thus, the labor cost is $90 x 5 = $450. Adding the fixed costs, we have $140 + $450 = $590.

D ($1,150) YOUR ANSWER

This option significantly overestimates the costs. While it includes fixed costs and labor, it suggests a number of employees or expenses that exceed the actual requirement to bake 300 cakes. The calculations show that the total cost is much lower than this figure.

Conclusion

The total cost for the bakery to produce 300 cakes daily is accurately calculated as $590, encompassing both fixed costs and the appropriate labor expenses. Understanding the breakdown of costs—fixed and variable—is crucial for determining overall expenses in production scenarios.

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?

Total cost to produce 300 cakes per day is $590.

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