The Controller for Andy's Bicycles Has Gathered the Following Cost

question 166

Essay

The controller for Andy's Bicycles has gathered the following cost and activity level information:

a. What is the total cost of producing 1,000 racing bicycles?
b. What is the variable cost of producing each racing bicycle?
c. Suppose the controller uses the average cost to predict total costs. What total cost would the controller calculate for 2,500 racing bicycles?
d. If the controller uses the cost equation to predict total costs, what total cost would the controller calculate for 2,500 racing bicycles?
e. Is there a difference between the forecasted total cost using average cost versus the cost equation? If there is a difference, what creates the difference? If there is no difference, when would there be a difference?

---

Definitions:

Neurons

Nerve cells.

Cortical Atrophy

The wasting away or decrease in size of the brain's cortex, often associated with aging or neurological diseases.

Dendrites

The branching projections of a neuron that act to conduct the electrochemical stimulation received from other neural cells to the cell body, or soma, of the neuron from which the dendrites project.

Reserve Capacity

The extra amount of functional capability that an organism or system can draw upon when needed.