Question

Runaround Corporation sells running shoes and during January they ran production machines for??? 20,000 hours total and incurred??? $9,000 in maintenance costs. During July they ran production machines for??? 14,000 hours total and incurred??? $7,200 in maintenance costs.
Based on this??? data, what is the cost formula for maintenance??? costs?

Answer 1

Answer: If we assume the production and cost are in a linear relationship, we can use the formula:  c = 0.3p  + 3000.

To start, we need to find the slope between the two given data points.

(20000, 9000) and (14000, 7200)

Using rise over run, we get 1800 over 6000, meaning the costs went up $1800 with a $6000 raise in production. This gives us a slope of 0.3.

Now, we have the equation, c = 0.3p + b. Input either of the points and solve for b, you will get a b value of 3000.