Question Robber Co (6/12)
variable cost (machine setup cost) of making in batches of 500 is 22000, now they are changing to batches of 400. what will be the cost now?
in the answer 22000 is multiplied by 500/400. this gives a higher cost than before, which is when they were produced in batches of 500. i thought this change would decrease the setup cost and the answer should be calculated by cross multiplying, 22000 multiplied by 400/500. could you explain?