Using the results obtained in Exercise 1 calculate the cost at 85 units using linear interpolation. What is the extent of the error caused by linear interpolation?

Data From Exercise 1:-

The behaviour of a cost can be expressed algebraically as:

where b = labour hours c = material in Kgs d = machine hours and x = output in units You are required to:

a. Explain what type of cost is depicted

b. Calculate the cost at output levels of 80 and 100 units when b = 6, c = 0.7 and d = 0.04.

Transcribed Image Text:

Cost bx + cx + dx 11