This is a repost. The last respondent did not give a complete answer. This question in in regards to an inspection service and their operating costs. What is needed: Draw a graph illustrating the total costs under this plan using the information below. Label the axes and show the costs at 600, 800, and 1,000 units inspected.
VC per inspection=Change in cost/change in inspection units
=($4,000-$3,600.)/1,000.-600.)
=$400.400
=$1
Total FC=TC for 1,000 units=Total VC for 1,000 unit=$4000-($1x1,000)
=$4,000-1,000
=$3,000.
Operating cost equation = FC+VC
OC for 800 inspections=FC+VC
=$3,000 + ($1 X800)
=$3,000 + $800
=$3,800