Question

The variable cost of producing an item is estimated to be $20\%$ of the total revenue. If the selling cost of the item is $\text{Rs.}8$ per unit, then the revenue function and variable cost respectively is

[2 marks]

• A. $8x,2x$
• B. $6x,3x$
• C. $x,2x$
• D. $8x,1.6x$

Answer 1

The correct option is D $8x,1.6x$

Let the number of units sold be $x.$
Then, revenue function, $R\left(x\right)=8x$
and variable cost, $VC=\frac{20}{100}\times 8x=1.60x$