Identifying variable, fixed and mixed cost functions. (15 minutes)

Bellingwolde, BV, operates car rental agencies at over 20 airports.

Customers can choose from one of three contracts for car rentals of one day or less:

® Contract 1:Dfl 50 for the day

@ Contract 2: Dfl 30 for the day plus Dfl 0.20 per km travelled

® Contract 3:Dfl 1.00 per km travelled REQUIRED 1. Present separate plots for each of the three contracts, with costs on the vertical axis and kilometres travelled on the horizontal axis.

2. Describe each contract as a linear cost function of the form y = a + bX.

3. Describe each contract as a variable, fixed or mixed cost function. gtr7