Problem
For a manufacturing company, total costs is the aggregate of total fixed costs and total variable costs.
In the following table you have the costs related to the different levels of activity.
Table 1
Total Costs
|
Output (Quantity produced)
|
Fixed Costs
|
Variable Costs
|
Total Costs
|
|
0
|
10
|
0
|
10
|
|
1
|
10
|
12
|
22
|
|
2
|
10
|
20
|
30
|
|
3
|
10
|
26
|
36
|
|
4
|
10
|
30
|
40
|
|
5
|
10
|
32
|
42
|
|
6
|
10
|
34
|
44
|
|
7
|
10
|
40
|
50
|
|
8
|
10
|
48
|
58
|
|
9
|
10
|
58
|
68
|
|
10
|
10
|
72
|
82
|
Instructions
Analyze and discuss the cost behavior for this case?
What process is used to estimate future costs?