The total cost (in dollars) of manufacturing xx auto body frames is: C(x)=60,000+300xC(x)=60,000+300x

Accounting Dec 08, 2020

The total cost (in dollars) of manufacturing xx auto body frames is: C(x)=60,000+300xC(x)=60,000+300x. Find the average cost per unit if 500 frames are produced.

Expert Solution

The given cost function is:

C(x)=60000+300xC(x)=60000+300x

Finding the average cost function by using the formula:

A(x)=C(x)xA(x)=60000+300xxA(x)=60000x+300A(x)=C(x)xA(x)=60000+300xxA(x)=60000x+300

Finding the average cost when x = 500 frames are produced:

A(500)=60000500+300A(500)=120+300A(500)=420A(500)=60000500+300A(500)=120+300A(500)=420

The average cost when 500 frames are produced is, $420 per unit.

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