Variable costs, fixed costs, total costs. Ana Compo is getting ready to open a small restaurant. She

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Variable costs, fixed costs, total costs. Ana Compo is getting ready to open a small restaurant. She is on a tight budget and must choose between the following long-distance phone plans:

Plan A: Pay 8 cents per minute of long-distance calling.

Plan B: Pay a fixed monthly fee of $16 for up to 300 long-distance minutes, and 5 cents per minute thereafter (if she uses fewer than 300 minutes in any month, she still pays $16 for the month).

Plan C: Pay a fixed monthly fee of $20 for up to 480 long-distance minutes and 4 cents per minute there-after (if she uses fewer than 480 minutes, she still pays $20 for the month).

1. Draw a graph of the total monthly costs of the three plans for different levels of monthly long-distance calling.

2. Which plan should Compo choose if she expects to make 100 minutes of long-distance calls? 300 minutes? 500 minutes?

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Cost Accounting A Managerial Emphasis

ISBN: 978-0136126638

13th Edition

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

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