Professional Documents
Culture Documents
TC = VC + FC
= aQ + FC ,
where, Q= output , avariable number
Example 2 :
Solution
Example 3:
TC1=FC+aQ1 TC2=FC+aQ2
350=FC+a(10)…..(1) 600=FC+a(20)……(2)
250=a(10)
a=25
Replace a into equations (1), 350=FC+25(10)
FC=100
Cost equation, TC = 100+25Q
Example 1 pg 46:
Joe College finds a motorcycle he likes and pays $40 as a down payment, which
will be applied to the $1,300 purchase price, but which must be forfeited if he
decides not to take the cycle. Over the weekend, Joe finds another motorcycle he
considers equally desirable for a purchase price of $1,230. for the purpose of
deciding which cycle to purchase, the $40 is a sunk cost and thus would not enter
into the decision, except that it lowers the remaining cost of the first cycle. The
decision then is between paying an additional $1,260 ($1,300 - $40) for the first
motorcycle versus $1,230 for the second motorcycle.
Example 2 :
tender of project by government..RM?
Example 1 pg 47:
Consider a student who could earn S20,000 for working during a year, but
choose instead to go to school for a year and spend S5,000 to do so. The
opportunity cost of going to school for that year is S25,000 ( S5,000 cash outlay
and S20,000 for income foregone .This figure neglects the influence of income
taxes and assumes that the student has no earning capability while in school.
Example 2:
Company must pay for income tax for every year. Cost for reduce tax ex:
entertains client, bonus for staff etc.
Exercise Chapter 2:
1. The total cost of repairing the two stores is RM1160. While the 10 stores,
costs improved to RM1800.
(a) Produce linear equations of the store.
(b) Calculate the fixed cost and variable costs of repairing 5 stores.