Question

A company sells its product at the rate of Rs. $6$ per unit. The variable costs are estimated to run $25\%$ of the total revenue received. If the fixed costs for the product are Rs. $4500$. Find the total cost function.

• A. $4500x$
• B. $4500x+\frac{1}{2}x$
• C. $4500x+\frac{3}{2}x$
• D. $4500x+\frac{5}{2}x$

Answer 1

Answer: (C)

$4500x+\frac{3}{2}x$

$\Rightarrow$ Here, price per unit $\left(p\right)=Rs.6$ and fix cost is $Rs.4500$.

$\Rightarrow$ $TotalrevenueR\left(x\right)=p.x=6x$ where $x$ is number of unit sold.

$\Rightarrow$ $TotalcostfunctionC\left(x\right)=4500x+\frac{25}{100}R\left(x\right)$

$\Rightarrow$ $C\left(x\right)=4500x+\frac{25}{100}\times 6x$

$\Rightarrow$ $C\left(x\right)=4500x+\frac{3}{2}x$