Estimating Total Cost (TC) using Total Fixed Cost (TFC) and Total Variable Cost (TVC)

To estimate the Total Cost (TC) at different levels of output, we can use the formula:

TC = TFC + TVC

Where:
TC = Total Cost
TFC = Total Fixed Cost
TVC = Total Variable Cost

Given Data:
- TFC at 0 level of output = Rs 60
- Output levels: 1, 2, 3, 4, 5
- TVC: 16, 22, 29, 42, 48

Calculating Total Cost (TC) at different levels of output:

Output Level 1:
TC = TFC + TVC
= 60 + 16
= 76

Output Level 2:
TC = TFC + TVC
= 60 + 22
= 82

Output Level 3:
TC = TFC + TVC
= 60 + 29
= 89

Output Level 4:
TC = TFC + TVC
= 60 + 42
= 102

Output Level 5:
TC = TFC + TVC
= 60 + 48
= 108

Explanation:

1. Total Fixed Cost (TFC):
Total Fixed Cost (TFC) refers to the cost that remains constant regardless of the level of output. In this case, the TFC at 0 level of output is given as Rs 60. This means that even when the output is zero, there is still a fixed cost of Rs 60.

2. Total Variable Cost (TVC):
Total Variable Cost (TVC) refers to the cost that varies with the level of output. In this case, the TVC values for different levels of output are given as 16, 22, 29, 42, and 48. These numbers represent the additional cost incurred as the output level increases.

3. Calculating Total Cost (TC):
To calculate the Total Cost (TC) at different levels of output, we add the Total Fixed Cost (TFC) to the Total Variable Cost (TVC). This gives us the total cost of production at each level of output.

Using the given formula, we can calculate the TC for each level of output as follows:
- For output level 1, TC = 60 + 16 = 76
- For output level 2, TC = 60 + 22 = 82
- For output level 3, TC = 60 + 29 = 89
- For output level 4, TC = 60 + 42 = 102
- For output level 5, TC = 60 + 48 = 108

Conclusion:
By using the formula TC = TFC + TVC, we can estimate the Total Cost (TC) at different levels of output. In this case, the TFC at 0 level of output is given as Rs 60, and the TVC values for different levels of output are provided. By calculating the