Bennet Company employs 20 individuals. Eighteen employees are paid $18 per hour and the rest are salaried employees paid $3,000 a month. Which of the following is the total cost function of personnel?
A) y = a + bX
B) y = b
C) y = bX
D) y = a

Question

Quizplus · Accepted Answer

The total cost function of personnel for Bennet Company includes both variable costs (hourly wages for 18 employees) and fixed costs (salaries for the rest). The variable cost depends on the number of hours worked (X), and the fixed cost (salaries) does not change with the number of hours. Therefore, the total cost function is y = a + bX, where 'a' represents the fixed salaries and 'bX' represents the total hourly wages.

Bennet Company Employs 20 Individuals