# Output in UnitsFixed CostsVariable CostsTotal Costs\$ 7,5009,00010,50012,000\$4,750\$12,25013,75015,25016,7502503004,7503504,7504,750400

Question
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Cost Relationships The following costs are for Optical View Inc., a contact lens manufacturer:

Required

1. Calculate and graph total costs, the total variable cost, and total fixed cost.

2. For each level of output calculate the per-unit total cost, per-unit variable cost, and per-unit fixed cost.

3. Using the results from requirement 2, graph the per-unit total cost, per-unit variable cost, and per-unit fixed cost, and discuss the behavior of the per-unit costs over the given output levels.

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Step 1

Total Cost of production includes both fixed cost and variable costs. Variable costs are those which vary with each level of output and fixed costs remain fixed over a period of time and are independent of the production level.

Step 2

The units produced have been plotted on x axis and costs on the y-axis.The blue line denotes the variable cost curve, black line, fixed cost and red total fixed costs.

Step 3

2.

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