Question

Variable costs, fixed costs, total costs. Bridget Ashton is getting ready to open a small restaurant. She is on a tight budget and must choose betweern the following long-distance phone plans: Plan A: Pay 10 cents per minute of long-distance calling. Plan B: Pay a fixed monthly fee of $15 for up to 240 long-distance minutes and 8 cents per minute thereafter (if she uses fewer than 240 minutes in any month, she still pays $15 for the month). Plan C: Pay a fixed monthly fee of $22 for up to 510 long-distance minutes and 5 cents per minute thereafter (if she uses fewer than 510 minutes, she still pays $22 for the month). Required 2-26 1. Draw a graph of the total monthly costs of the three plans for different levels of monthly long-distance calling. 2. Which plan should Ashton choose if she expects to make 100 minutes of long-distance calls? 240 minutes? 540 minutes?

Answer 1

Ans: 1) Image of Graph for Plan A, Plan B and Plan C

2) Selection of Best Plan

Number of MInutes	Cost in Plan A ($)	Cost in Plan A ($)	Cost in Plan A ($)	Plan to be selected
100	10 (100 min*0.1$)	15	22	Plan A
240	24 (240 min*0.1$)	15	22	Plan B
540	54 (540 min*0.1$)	39 (((540-240) min*0.08 $) +15 $)	23.5 (((540-510) min*0.05 $) + 22 $)	Plan C