Help please! if you can write the formulas

Question Description

I’m studying for my Marketing class and need an explanation.

Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

Total cost(TC)= Variable Cost(VC) + Fixed Cost(FC)

TC =FC + VC

y = mx + c

y - TC

m - VC

x - number of units

c - FC

Forecasted Output(x) = 10,000 units

process one:

x = 10000 units
m = \$50.00
c = \$100000
therefore, TC = 50 * 10000 + 100000
= \$600,000

process two
x = 10,000units
m = \$30.00
c = \$250,000
therefore, TC = 30*10000 + 250,000
= \$550,000

since \$550,000 < \$600,000

therefore they used process two.

cost of producing 4000units

process one

TC = 50*4000 + 100000

= \$300,000

process two

TC = 30*4000 + 250,000

= \$370,000

therefore, extra cost incurred

= \$370,000-\$300,000

= \$70,000.

Felix N (182)
Cornell University
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