Examine these graphs for Kristen Company and answer the following questions.

Assume that if activity increased beyond 40 units, a new relevant range would apply (for example, if fixed costs are expected to be $280 from 41 to 80 units).

a. What is the cost equation?

b. Explain why the total cost graphs differ for fixed and variable costs.

c. Explain why the average cost graphs differ for fixed and variable costs.

d. What are total costs at 30 units?

e. What is the new cost equation if activity is between 41 and 80 units?

f. What are total costs at 60 units?

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Dollars Dollars 200 150 100 50 0 120 100 80 60 40 20 0 Total Fixed Costs 0 5 10 15 20 25 30 35 40 Activity (Units) Total Variable Costs 0 5 10 15 20 25 30 35 40 Activity (Units) Dollars Average fixed cost per unit 18 16 14 12 10 2498 0 0 Dollars N Avg Variable Cost Per Unit 4 3.5 3 2.5 5 10 15 20 25 30 35 40 Activity (Units) 1.5 1 0.5 0 05 10 15 20 25 30 35 40 Activity (Units)