Total Fixed Costs Are $25,000 Per Year

question 15

Essay

Total fixed costs are $25,000 per year. The variable cost per unit is $10 per unit up to 5,000 units per year and $7.50 per unit thereafter.
a)Develop a cost function for this cost.
b)What could cause the change in variable costs shown above? Explain.
c)List three assumptions that are made when developing these types of cost functions and give one reason that each assumption might not hold.

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Definitions:

Foramen

A natural opening or passage, especially in a bone, through which nerves or blood vessels may pass.

Yellow Bone Marrow

A type of bone marrow primarily composed of fat cells, which serves as a storage reserve of fats and contributes to energy supply.

Medullary Cavity

The central cavity of bone shafts where red bone marrow and/or yellow bone marrow (fat) is stored; it is found within the diaphysis of long bones.

Adipose-Filled

Refers to tissues or spaces within the body that are filled with adipose tissue, a type of connective tissue that stores fat.