Question: Great Motel's cost function is given as: Y = $150,000 + $3.00X Where: Y = annual custodial cost X = number of guest-days of occupancy
Great Motel's cost function is given as:
Y = $150,000 + $3.00X
Where: Y = annual custodial cost
X = number of guest-days of occupancy
In the current year, Great Motel has 7,500 guest days. In the next year, Great Motel expects an occupancy level of 9,000 guest days. (All costs next year will remain in the same relevant range as the current year.) What is the expected total custodial cost for next year? A) $150,000 B) $172,500 C) $177,000 D) $185,000
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