Cost behavior in event of capacity change. Muller's Gasthaus, a lodge located in a fast-growing ski resort, is planning to open its new wing this coming winter, increasing the number of beds by 40 percent. Although variable costs per guest-day will main unchanged, fixed costs will increase by 25 percent. Last year's costs follow:

a. Sketch the cost function.

b. Calculate the additional fixed operating costs that Muller's Gasthaus will incur next year.

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Variable Costs Fixed Costs $50,000 30,000