A manufacturer of DVD players has a monthly fixed cost of $15,700 and a variable cost of $0.60/disc. Find a function C that gives the total cost incurred by TMI in the manufacture of x discs/month.

C = 0.60Q + 15,700

Explanation:

The cost function will be:

total cost = fixed cost + variable cost

where variable cost = variable per unit x unit output

We are given with the figures

variable cost per DVD: 0.60

monthly fixed cost 15,700

total cost = 15,700 + 0.60 x Q

Notes:

If the fixed cost were given annually, we should divide by 12 to convert to a monthly value

The variable cost are constant at unit level, so their remain at 0,60 for the relevant range.