Question 162385
fixed cost is a constant value that does not depend on x since it will be the same regardless of how many units are produced.
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the first thing they told you is that the total cost for a day is 6500 when 40 units are produced.
your formula for that would be:
500 + 40*x = 6500
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solving for that, the equation becomes
40*x = 6000
x = 150
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your cost per unit is 150.
the equation for the reduced output is
500 + 28*x = y
where x is the cost per unit and y is the total cost per day.
since you know x, you substitute 150 for x and the equation becomes
500 + 28*150 = y
which becomes
500 + 4200 = y
which becomes 4700 = y
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your answer at 28 units per day is:
cost per unit = $150.00
fixed cost = $500.00
variable cost = number of units times cost per unit = $4200.00
total cost = fixed cost plus variable cost = $4700.00
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