Final answer:
The cost function for Auto Time is
, which accounts for both the fixed cost of $48,000 and the variable cost of $6 per electronic timer manufactured.
Step-by-step explanation:
The student has asked about the cost function for Auto Time, a manufacturer of electronic timers. The company has a monthly fixed cost of $48,000 and a variable production cost of $6 for each timer manufactured. The cost function represents the total cost as a function of the number of units produced, which includes both fixed costs and variable costs. So, the cost function would include the fixed cost of $48,000 no matter how many timers are made, plus the variable cost of $6 per timer. Therefore, the correct cost function is:
where 'C' represents the total cost and 'x' is the number of timers produced. This formula shows that for each additional timer made, the total cost increases by $6. The answer, then, corresponding to the multiple-choice options provided, is A)
, even though there's a typo in the answer options. The 'x' should not be multiplied by 48,000, as the fixed cost does not change with the number of units produced. The correct answer should read A)
