0702--01 - 800 1000 2000 4000 6000 8000 1 10 4 Production...

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Linear cost functions Basic linear cost function COST . VC X FC where VC is variable cost per unit of activity, X is the units of activity, ( VC X ) is the variable component, and FC is the fixed component of the cost. Variable cost example DL( ) X . 10 X 0 0 200 400 600 800 1000 2000 4000 6000 8000 1 10 4 Direct labor as function of units prod. Units produced Direct labor costs DL( ) X X 1
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Fixed cost example MGR( ) X . 0 X 2000 0 200 400 600
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Unformatted text preview: 800 1000 2000 4000 6000 8000 1 10 4 Production manager salaries Units produced Production managers salaries MGR( ) X X "Mixed" cost example TPC( ) X . 10 X 2000 <=> TPC( ) X DL( ) X MGR( ) X 200 400 600 800 1000 2000 4000 6000 8000 1 10 4 1.2 10 4 Total production costs Units produced Total production costs TPC( ) X MGR( ) X X ν 2...
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