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Given the cost formula, Y = $7,000 + $1
Given the cost formula, Y = $7,000 + $1.80X, total cost for an activity level of 4,000 units would be:
a. $7,000
b. $200
c. $7,200
d. $14,200
Expert Solution
Option d. $14,200 is correct.
Y = $7,000 + $1.80X
Whereas,
Fixed cost = $7,000
Vraiable cost per unit = $1.80
Number of units = X = 4,000
Y = $7,000 + $1.80 (4,000)
Y= $14,200
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