The State Department of Taxation processes and audits income-tax returns for state residents. The state tax commissioner has recently begun a program to estimate the costs of running the department. The independent variable used in the program is the number of returns processed. The analysis revealed that the following variable costs are incurred in auditing a typical tax return.

Time spent by tax professional, 20 hours at $25 per hour

Time spent by clerical employees, 10 hours at $12 per hour

Telephone charges, $10 per audit

Computer time, $50 per audit

Postage, $2 per audit

In addition, the department incurs $10,000 of fixed costs each month that are associated with the process of auditing returns.

Required:

Draw a graph depicting the monthly costs of auditing state tax returns. Label the horizontal axis “Tax returns audited.”