Question

A small company that makes hand-sewn leather shoes has fixed costs of $320 a day, and total costs of $1200 per day at an output of 20 pairs of shoes per day. Assume that total cost C is linearly related to output x. Find an equation of the line relating output to cost.
A) C = 44x + 320.
B) C = 60x + 1520.
C) C = 60x + 320.
D) C = 44x + 1520.

Answer 1

Answer: c = 44x + 320

Explanation:

Based on the information given, the cost of materials used in the shoe is a variable cost and this will be:

= Total cost - Fixed cost

= $1200 - $320

= $880

Since there are 20 shoes, the cost if materials used per shoe is: = $880/20 = $44

Then the total cost equation will then be:

c = 44x + 320

where,

C = Total cost incurred in a day

x = Number of pair of shoes made in a day.

Therefore, the correct option is A.

Answer 2

The equation that related the output to cost is option c. 60x + 320.

Calculation of an equation:

Since we know that the variable cost is

= Total cost - Fixed cost

= $1200 - $320

= $880

Now the cost per shoe should be

= $880/20

= $44

So here the total cost c equation should be

c = 44x + 320

Here

x be Number of pair of shoes.

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