Children's World Toy Shop is an on-line toy store specializing in hand made stuffed animals.Children's World sold 4,000 Donny the Dragon stuffed toys during April and 6,000 during May.Shipping costs for the two months were $12,000 and $16,800 respectively.Using these two months' data,the shipping cost function is best estimated as
A)$2 x number of toys sold + $70,000
B)$2.40 x number of toys sold + $2,400
C)$3 x number of toys sold + $2,880
D)$0.50 x number of toys sold + $10,000

Question

Quizplus · Accepted Answer

The variable cost per toy is calculated as the change in cost divided by the change in the number of toys: ($16,800 - $12,000) / (6,000 - 4,000) = $2.40. The fixed cost is calculated by substituting into the cost equation: $12,000 = $2.40 * 4,000 + Fixed Cost, which gives a fixed cost of $2,400.

Children's World Toy Shop Is an On-Line Toy Store Specializing