Based on the question, a table was found to supplement the needed data.
Problem: Found the utility cost
Given:
Based on the given table Units Utility Cost
High-Level Activity $8,000 $8,000
Low-level Activity $5000 $1,500
Mathematical Operation: multiplication, addition, subtraction and division
Solution: Variable cost per unit (VSU), Change in Cost (CC), Cost in Activity (CA), Fixed Cost (FC), Variable Cost Element (VCE), Total Cost (TC) High-Level Activity Unit (HLAU)
VCU= CC÷ CA
= $1,500 ÷ 3,000 units
= $0.50 per unit
Fixed cost = TC- (VCE [VCUx HLAU])
= $8,000 - ($0.50 per unit × 8,000 units)
= $8,000 - $4,000
= $4,000
The Choices are:
A.Y = $1.00 X
B.Y = $1.25 X
C.Y = $4,000 + $0.50 X
D.Y = $1,500 + $1.25 X
The answer is A.
