Sunset Motel's Cost Function Is Given As

question 84

Multiple Choice

Sunset 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,Sunset Motel has 8,000 guest days.In the next year,Sunset 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 total variable custodial cost for next year?

• A) $60,000
• B) $75,000
• C) $95,000
• D) $170,000

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