Bellingwolde BV operates car rental agencies at over 20 airports. Customers can choose from one of three
Question:
Bellingwolde BV operates car rental agencies at over 20 airports. Customers can choose from one of three contracts for car rentals of one day or less:
• Contract 1: €50 for the day
• Contract 2: €30 for the day plus €0.20 per km travelled
• Contract 3: €1.00 per km travelled
Required
1 Present separate plots for each of the three contracts, with costs on the vertical axis and kilometres travelled on the horizontal axis.
2 Describe each contract as a linear cost function of the form y = a + bX.
3 Describe each contract as a variable, fixed or mixed cost function.
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Related Book For
Management and Cost Accounting
ISBN: 978-1405888202
4th edition
Authors: Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, George Foster
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