Question: Elegant Motel's cost function is given as: Y = $25,000 + $14.00X Where: Y = annual custodial cost X = number of guest-days of occupancy
Elegant Motel's cost function is given as:
Y = $25,000 + $14.00X
Where:
Y = annual custodial cost
X = number of guest-days of occupancy
In the current year, Elegant Motel has 9,000 guests days. In the next year, Elegant Motel expects an occupancy level of 10,000 guest days. All costs next year will remain in the same relevant range as the current year. What is the expected fixed custodial cost for next year?
| A. | $25,000 | |
| B. | $140,000 | |
| C. | $126,000 | |
| D. | $14.00 |
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