Ricwy Corporation uses the cost formula Y 4800 040X for th

Ricwy Corporation uses the cost formula Y = $4,800 + $0.40X for the maintenance cost, where X is machine-hours. The August budget is based on 9,000 hours of planned machine time. Maintenance cost expected to be incurred during August is:

$4,800

$3,600

$8,400

$1,200

Solution

The correct answer is $ 8,400

Note :

Y = $ 4,800 + $ 0.40 X

= $ 4,800 + $ 0.40 *9,000

= $ 8,400

Since the budgetted hours is 9,000 for the month of August, hence X is considered as 9,000 in the given cost equation.