Question

Given the mixed cost formula, Y = $16,000 + $3.40X, total cost for an activity level of 4,000 units would be:


(A) $16,000

(B) $13,600

(C) $3,600

(D) $29,600

Answer 1

Answer:

D) $29,600

Explanation:

The mixed cost formula gives the relationship between the cost and the level of activities. It shows the cost as a function of the activity level.

The formula also shows that the cost is made up of a fixed element ($16,000) and a variable element ($3,40X).

Hence at an activity level of 4000 units,

Y = $16,000 + $3.40(4000)

= $29,600