Question

Production costs for manufacturing t-shirts consist of a fixed cost of $20,000 plus variable costs of $5 per shirt. Each t-shirt sells for $7 dollars.

a. What is the cost equation?

Answer 1

The cost equation for the t-shirt production scenario is represented as C = $20,000 + $5X, where 'C' is the total cost and 'X' is the number of t-shirts produced.

Step-by-step explanation:

The cost equation for manufacturing t-shirts, which includes fixed costs and variable costs, is used to determine the total cost of production at different levels of output. In this scenario, the fixed cost is $20,000, and the variable cost is $5 per shirt. Thus, the cost equation can be represented as C = Fixed Costs + (Variable Costs per unit × Number of units), which simplifies to C = $20,000 + $5X, where 'X' represents the number of t-shirts produced.