Question

Wofril Corporation uses the cost formula Y = $5,300 + $0.60X for the maintenance cost, where X is machine-hours. The August budget is based on 8,000 hours of planned machine time. Maintenance cost expected to be incurred during August is:A) $10,100
B) $4,800
C) $500
D) $5,300

Answer 1

Answer:

Option (A) is correct.

Explanation:

Given that,

Formula for maintenance cost: Y = $5,300 + $0.60X

X is machine-hours

Planned machine time for August budget = 8,000 hours

Therefore,

Maintenance cost expected to be incurred during August:

= $5,300 + $0.60X

= $5,300 + ($0.60 × 8,000)

= $5,300 + $4,800

= $10,100

Therefore, the maintenance cost is $10,100.