A bicycle company has a monthly fixed cost of $2,000. It costs $50 to manufacture each bicycle.What is the company’s monthly cost equation?
Question
A bicycle company has a monthly fixed cost of 50 to manufacture each bicycle.What is the company’s monthly cost equation?
Solution
The company's monthly cost equation can be determined by adding the fixed costs to the variable costs (which depend on the number of bicycles produced).
The fixed cost is $2000 per month.
The variable cost is $50 per bicycle.
If we let X represent the number of bicycles produced in a month, then the variable cost is $50X.
Therefore, the total cost (C) each month is the fixed cost (50X).
So, the monthly cost equation is:
C = 50X
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