Answer:
(A) 2,140 + 540x
(B) $27,520
(C) $540
Explanation:
Given that,
Fixed cost = $2,140 per month
Total cost to manufacture 21 bikes = $13,480
Variable cost for manufacturing 21 bikes:
= Total cost - Fixed cost
= $13,480 - $2,140
= $11,340
Variable cost for each bike:
= Total variable cost ÷ No. of bikes manufacture
= $11,340 ÷ 21
= $540 per bike
Let the number of bikes manufacture be x
(A) The cost function is as follows:
= Fixed cost + Variable cost
= 2,140 + 540x
(B) The total cost to manufacture 47 bikes:
= Fixed cost + Variable cost
= $2,140 + ($540 × 47)
= $2,140 + $25,380
= $27,520
(C) The cost to produce each additional bike:
= Variable cost for each bike
= $540