Question

A company sells doughnuts. They incur a fixed cost of $23000 for rent, insurance, and other expenses. It costs $0.1 to produce each doughnut. The company sells each doughnut for $0.2.
Part A. Construct a linear model that describes their total costs, C, as a function of the number of doughnuts, x, they produce.

Answer 1

Answer:

C(x) = 0.1x+23000

Step-by-step explanation:

Given that a company sells doughnuts. They incur a fixed cost of $23000 for rent, insurance, and other expenses. It costs $0.1 to produce each doughnut. The company sells each doughnut for $0.2.

Let X be the no of units produced

Then we have variable cost = 0.1x

Fixed cost = 23000 (irrespective of value of x)

Total cost

$C(x) = 0.1x+23000$

where C represents the total cost and x no of units produced.

Revenue function would be

$R(x) = 0.2x$ assuming all doughnuts are sold.

Profit function would be

$P(X) = 0.1x-23000$