The Colony Sausage Company produces one of the best sausage products in Texas. T

Question

The Colony Sausage Company produces one of the best sausage products in Texas. The company's controller analyzed the following from the accounting records: 1. Meat costs the company $4.25 per pound of sausage produced. 2. Direct labor costs are $3.25 per pound of sausage produced. 3. Supervisory salaries total $33,000 per month. 4. Utility costs of $12,000 per month plus $0.45 per pound of sausage produced. 5. Insurance and property taxes average $10,000 per month.

Required: A. Write a formula to express the behavior of the firm's production costs. (Use the form Y = a + bX, where X denotes the quantity of sausage produced.)

Explanation / Answer

Meat costs 4.25 Direct labor 3.25 Utility costs 0.45 Variable cost 7.95 Fixed cost Supervisory salaries 33,000 Utility costs 12000 Insurance and property taxes 10,000 Fixed cost 55,000 Y =55000+7.95X

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