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

Question

3 years ago

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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.

Business

1 answer:

anastassius [24] · Answer 1 · 2022-06-11T21:03:45+03:00

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.