Sage,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:
a.What is Sage's total fixed cost?
b.What is Sage's variable cost per unit?
c.What total cost would Sage predict for a month in which they sold 10,000 units?
Definitions:
Cost Minimization Problem
The process of finding the least expensive way to produce a given level of output or to achieve a particular production objective.
Linear Variable Cost Function
A mathematical expression that describes how total variable costs change with changes in the quantity of output.
Marginal Cost
The cost incurred by producing one more unit of a good or service.
Constant
A value that does not change.
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