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Given the cost formula Y = $12,000 + $6X, what is the total cost at an activity level of 8,000 units?Multiple Choice$20,000$12,000$60,000$48,000

Question

Given the cost formula

Y=12,000+6X Y = 12,000 + 6X

what is the total cost at an activity level of 8,000 units?

Multiple Choice

  • $20,000
  • $12,000
  • $60,000
  • $48,000
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Solution

The formula given is Y = 12,000+12,000 + 6X. This is a cost formula where Y is the total cost, X is the number of units, 12,000isthefixedcostand12,000 is the fixed cost and 6 is the variable cost per unit.

Step 1: Identify the given values. Here, X = 8,000 units.

Step 2: Substitute the given value of X into the formula. So, Y = 12,000+12,000 + 6 * 8,000.

Step 3: Perform the multiplication. 68,000=6 * 8,000 = 48,000.

Step 4: Add the fixed cost to the result of the multiplication. So, Y = 12,000+12,000 + 48,000 = $60,000.

So, the total cost at an activity level of 8,000 units is $60,000.

This problem has been solved

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