Answer:
the cost function will be as follows:
[tex]C_u = 0.1 u + 2,000[/tex]
Explanation:
We subtract high from low to sovle for the variable part:
[tex]\left[\begin{array}{ccc}High&120000&14000\\Low&80000&10000\\Diference&40000&4000\\\end{array}\right][/tex]
We get hat 40,00.0 units generate cost for $4,000
we divide and get that 1 units generates $0.1 of cost
Now, we solve for the fixed component
variable cost 0.1
Total Cost 14,000
14,000 = 0.1 x 120,000 + B
14,000 = 12000 + B
Fixed Cost 2000
