A Linear Cost Function Is Estimated Over the Relevant Range

question 77

Multiple Choice

A linear cost function is estimated over the relevant range of 0 to 1,000 orders.The equation estimated is: Y = $25,000 + $89X where Y equals the total order-processing cost and X equals the number of orders.If the number of orders increases to 1,800,what is the predicted total order-processing cost?

• A) $25,000
• B) $160,200
• C) $185,200
• D) cannot be determined

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Definitions:

Total Revenue

Total Revenue is the total amount of money received by a company for goods sold or services provided during a certain time period.

Total Cost Of Production

The overall expense incurred in manufacturing a product, including the costs of material, labor, and overhead.

Economic Losses

Financial losses experienced by a business or economy, often resulting from unfavorable business conditions or the production of goods for which the cost exceeds the revenue.

Variable Costs

Costs that vary directly with the level of production, such as materials and labor.