Answer :
The fixed cost is $100 and the cost per guest is $8
Fixed cost is the constant cost the caterer incurs. It does not change with the guests served
Variable cost is the cost that depends on the guests served. It increases per guests served
Total cost is the sum of fixed and variable cost
The following equations can be derived from the question
a + 25b = 300 equation 1
a + 40b = 420 equation 2
Where:
a = fixed cost
b = variable cost per guest
To determine the costs, simultaneous equation would be used
Subtract equation 1 from 2
15b = 120
divide both sides of the equation by 15
b = 8
Substitute for b in equation 1
a + 25(8) = 300
a + 200 = 300
a = 300 - 200
a = 100
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