Charlie Shine has written a self-improvement book. The following are its pricing and cost details:
Selling price $18.00 per book
Variable cost per unit:
Production $3.50
Selling & administrative 1.90
Fixed costs:
Production $33,600 per year
Selling & administrative 15,540 per year
What is the cost formula for this operation, where TC = Total cost and x = units sold?

Question

Quizplus · Accepted Answer

The total cost (TC) is calculated by adding the total variable costs and total fixed costs. The variable cost per unit is $3.50 (production) + $1.90 (selling & administrative) = $5.40. The fixed costs are $33,600 (production) + $15,540 (selling & administrative) = $49,140. Therefore, the cost formula is TC = 5.40x + 49,140.

Charlie Shine Has Written a Self-Improvement Book