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Total cost (CT) is the sum of fixed costs (CF) and variable costs (CV):
Variable cost is a function of demand
Where, cV = variable cost per unit
Therefore,
Equation 2-5
Figure 2-4 shows the fixed cost, variable cost, and total cost as a function of units of demand.
Figure 2.4
Fixed Cost, Variable Cost, and Total Cost
Equation 2‑6
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