Question

Botana Company constructed the following formula for monthly utility cost. Total utility cost = $1,200 + ($8.10 × labor hours) Assume that 775 labor hours are budgeted for the month of April. Calculate the total variable utility cost for the month of April. a.$5,077.50 b.$7,477.50 c.$1,200.00 d.$6,277.50

Answer 1

Answer:

The answer is: D) $6,277.50

Explanation:

Total costs are made up of fixed costs + variable costs.

Fixed costs are costs that don't change with an increase or decrease in the production levels (Botana's fixed costs are $1,200).

Variable costs are costs that change with an increase or decrease in the production levels (Botana's variable costs = $8.10 per labor hour x 775 labor hours = $6,277.50)