A foundry has a fixed daily cost of Rs.500*Q whenever it operates and a variable cost of Rs.800*Q, where Q is the daily ...

Question

A foundry has a fixed daily cost of Rs.500*Q whenever it operates and a variable cost of Rs.800*Q, where Q is the daily production in tonnes. What is the cost of production in Rs. per tonne for a daily production of 10 tonnes?

Accepted Answer

The cost of production is Rs.1,300 per tonne for a daily production of 10 tonnes. The foundry has two cost components: a fixed daily cost (proportional to Q in this formulation) and a variable cost per tonne. Total cost divided by production quantity gives the cost per tonne. At Q = 10, we substitute and simplify to get the per-unit cost.