The fix cost to produce the doll is $100,000. the variable cost, which includes material, labor, and shipping costs, is $34 per doll. during the holiday selling season, mandrell will sell the dolls for $42 each. if mandrell overproduces the dolls, the excess dolls will be sold in january through a distributor who has agreed to pay mandrell $10 per doll.
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Variable costs are dependent on production output. ... Examples of variable costs are sales commissions, direct labor costs, cost of raw materials used in production, and utility costs. The total variable cost is simply the quantity of output multiplied by the variable cost per unit of output.
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