Question 3

Flights Ltd offers a helicopter service from South Australian regional areas to Adelaide Airport. Each of its 20 helicopters makes between 1 500 and 2 500 round-trips per year. The company's records show that a helicopter that has made 1 500 round-trips in the year incurs an average operating cost of $400 per round trip, and one that has made 2 500 round-trips in the year incurs and average operating cost of $350 per round trip.

Required

a) Estimate a linear cost function in forms of TC = F + V * Q, where TC is the total annual operating cost of helicopter and Q is the number of round-trips it makes to Adelaide airport during the year.