Asked by Jonathan Ghansiam on Jun 12, 2024
Verified
Given the cost formula Y = $17,500 + $4X, at what level of activity will total cost be $42,500?
A) 10,625 units.
B) 6,250 units.
C) 4,375 units.
D) 5,250 units.
Cost Formula
A mathematical equation or method used to calculate the total cost of production or service, considering both variable and fixed expenses.
- Calculate foreseeable costs taking into account outlined activity magnitudes and the characteristics of how costs behave.
Verified Answer
EG
elizabeth gutierrezJun 18, 2024
Final Answer :
B
Explanation :
To find the level of activity (X) that results in a total cost (Y) of $42,500, we can substitute Y with $42,500 in the cost formula and solve for X: $42,500 = $17,500 + $4X. Subtracting $17,500 from both sides gives $25,000 = $4X. Dividing both sides by $4 gives X = 6,250 units.
Learning Objectives
- Calculate foreseeable costs taking into account outlined activity magnitudes and the characteristics of how costs behave.