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Question
A company sells hand towels at ₹ 100 per unit. The fixed cost for the company to manufacture hand towels is ₹ 35,000 and variable cost is estimated to be 30% of total revenue. What will be the total cost function for manufacturing hand towels?
Options
35000 + 3x
35000 + 30x
35000 + 100x
35000 + 10x
Solution
35000 + 30x
Explanation:
Here, fixed cost = ₹ 35,000
Total revenue = ₹ 100x, if x units are sold
Variable cost = `30/100` × Revenue
= `30/100 xx 100x`
= 30x
∴ Total cost function = F.C. + V.C.
= 35,000 + 30x
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