A viable argument showing how it is reflected by the Cost Function for Wichita’s factory is; The cost of production per unit of item produced is 1$ as long as total units produced is less than 2500. If more than 2500 units are produced than the cost per unit actually comes down to 0.8$per unit.
<h3>How to Interpret Cost Functions?</h3>
From the given options, the best statement is;
The plant’s production processes are performed primarily by robots that are able to work longer hours, when needed, at no additional cost.
A cost function is a formula used to predict the cost that will be experienced at a certain activity level. Thus, the cost function for the best option is;
The cost of production per unit of item produced is 1$ as long as total units produced is less than 2500. If more than 2500 units are produced than the cost per unit actually comes down to 0.8$per unit.
The missing options are;
___ The electricity contract with the utility company is structured so that higher daily energy usage is charged at a lower rate.
___ The plant’s production processes are performed primarily by robots that are able to work longer hours, when needed, at no additional cost.
___ Overtime wages were required to produce at levels above 25,000 units.
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