Question

Lakeview Apartments is an 800​-unit apartment complex. When the apartments are​ 90% occupied, monthly operating costs total $ 220 comma 040. When occupancy dips to​ 80%, monthly operating costs fall to $ 215 comma 480. The owner of the apartment complex is worried because many of the apartment residents work at a nearby manufacturing plant that has just announced it will close in three months. The apartment owner fears that occupancy of her apartments will drop to 55​% if residents lose their jobs and move away. Assuming the same relevant​ range, what can the owner expect her operating costs to be if occupancy falls to 55​%?

Answer 1

Answer:

$204,080

Explanation:

The computation of operating cost is shown below:-

operating cost if occupy 55%

Cost on (800 × 90%)

= 720 units is $220,040

Cost on (800 × 80%)

= 640 Units is $215,480

Variable cost per unit = Changes in total cost ÷ High activity-Low activity

= ($220,040 - $$215,480) ÷ (720 - 640)

= 4,560 ÷ 80

= 57 per unit

Fixed cost = Total cost - Variable cost

= $220,040 - (720 × 57)

= $179,000

Cost equation:

Total cost = Fixed cost + Variable cost per unit

Y = $179,000 + 57X

Y = $1790,00 + (57 × 440)

Y = $204,080