ECONOMICS

Detailed explanation-1: -To qualify as a production cost, an expense must be directly connected to generating revenue for the company. Total product costs can be determined by adding together the total direct materials and labor costs as well as the total manufacturing overhead costs.

Detailed explanation-2: -The variable cost is $16, 000 at the level of production of 16, 000 units. Thus, the $1 per unit is the variable cost (which is the division of the total variable cost by the total number of units).

Detailed explanation-3: -Total cost is the sum of fixed and variable expenses; if a business’s fixed costs are $2, 000, and the variable costs are $5, 000, the total production cost would be $7, 000.