Question

If fixed cost of 20 article is 500 and variable cost for each article is 40. Find the total cost function? Also ,find the total cost of 90 articles?

Answer 1

Cost function = 40a + 500

Cost of 90 articles = $4,100

Explanation:

The fixed cost is $500 and it will.not change regardless of production level.

The Variable cost is $40 and increases by every additional unit produced.

Assume the number of articles produced is a.

Cost function would be:

Total cost = Variable cost * Number of articles + Fixed cost

TC = 40a + 500

Using this, the cost of 90 articles is:

= 40 * 90 + 500

= $4,100