Question

Let's try to determine the cost function for another company like ABC who makes sausages. Assume costs are as follows:

Monthly depreciation on buildings and equipment is $17528
Product costs are $1.15 per pound produced
Wages are $1.95 per pound produced
Supervisory Salaries total $14736 per month
Utilities cost $4530 per month plus $.20 per pound produced.
What is the variable cost portion of their cost formula? (in other words, what is the "v" in y = f + vx)

Enter your answer to two decimal places, and don't include dollar signs.

Answer 1

Answer:

$3.30 per pound

Explanation:

The computation of the variable cost portion of their cost formula is shown below:

= Product cost + wages + utilities cost

= $1.15 per pound + $1.95 per pound + $0.20 per pound

= $3.30 per pound

The above cost i.e product cost, wages, and the utilities cost are terms as the variable cost portion so all these three would be considered and others are ignored