Question

According to cost formula Y = $20,000 + $4X, total cost at an activity level of 15,000 units would be:
$20000
$35000
$80000
$60000

Answer 1

 Given,

Cost formula Y = $$20,000 +$ $$4$X

To find,  

The total cost of  activity of $15,000$ units

Solution,  

For calculating the total cost of the activity we need to put the units in the cost formula

Y = $$20,000$ $+$ $$4$X

When X $= 15,000$

Y = $ $20,000$ + $ 4 × $15,000$

Y = $ $20,000$ + $ $60,000$

Y = $$80,000$

So, therefore, the correct option is the third option which gives the value

' $$80,000$ '                                              

Answer 2

Answer:

Explanation:

Concept:

The sum of the production's fixed and variable costs is used to compute total costs.

Given:

Cost formula is $Y =$$$20,000 +$$$4X$.

Find:

The total cost of  activity of $15,000$ units.

Solution:

Fixed cost is $$20,000$

Variable cost is $$4$ per unit

Number of units are $15,000$

Total cost = Fixed cost + variable cost

    $= 20,000 +$($$4 \times 15000$) $=$ $$80,000$

Thus, option 'C' . $$80,000$ is the required value for total cost.

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