Sunrise Motel's Cost Function Is Given As

question 29

Multiple Choice

Sunrise Motel's cost function is given as:
Y = $75,000 + $9.50X
Where:
Y = annual custodial cost
X = number of guest-days of occupancy
In the current year,Sunrise Motel has 8,000 guest days.In the next year,Sunrise 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) $7.50
• B) $50,000
• C) $62,500
• D) $75,000

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