Processing math: 100%

Cost Function Calculator

Formula

The formula to calculate the total cost is:

$C(x) = FC + x \times VC$

where $C(x)$ is the total cost at $x$ number of units, $FC$ is the fixed cost, $x$ is the total number of units, and $VC$ is the average variable cost per unit.

What is a Cost Function?

A cost function is a mathematical formula used to calculate the total cost of producing goods. It typically includes fixed costs (costs that do not change with the level of production) and variable costs (costs that vary with the level of production). The most standard cost function is:

$C(x) = FC + x \times VC$

where $C(x)$ is the total cost, $FC$ is the fixed cost, $x$ is the number of units, and $VC$ is the variable cost per unit.

Example Calculation

Let's assume we have the following values:

Fixed Cost ( $FC$ ) = $1000
Number of Units ( $x$ ) = 500
Variable Cost per Unit ( $VC$ ) = $2

Step 1: Multiply the number of units by the variable cost per unit:

$x \times VC = 500 \times 2 = 1000$

Step 2: Add the fixed cost to the result:

$C(x) = 1000 + 1000 = 2000$

Therefore, the Total Cost is $C(x) = \$2000$ .