Business, 19.03.2020 21:07 emilycolley2

Liu, Inc. creates DVDs for major film companies. Over the past two years, Liu has only used one machine to burn the DVDs. This machine had the capacity to burn 50,000 DVDs per month. This year Liu purchased a brand new machine for burning the DVDs that had additional capacity of 60,000 DVDs per month and a cost of $2,275,000. He estimates the machine has a useful life of five years. Before production of DVDs, Liu purchases blank DVDs from a domestic supplier at a cost of $0.25 / DVD. The manufacturing process requires two line workers; one to run the machine and one to package the DVDs. These employees are paid $0.05 / DVD produced (each). Cost of packaging is $1.75 / DVD. Additionally, Liu hired a production supervisor and is paying her $ 65,000 / year in salary and pays $ 9,000 / year in insurance. This year Liu estimates he will produce and sell a total of 1,000,000 DVDs (sales price = $5.50 / DVD).

Which one is NOT a variable cost?

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Liu, Inc. creates DVDs for major film companies. Over the past two years, Liu has only used one mach...

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