Given the cost formula Y = $17,500 + $4X, at what level of activity will total cost be $42,500?
A) 10,625 units
B) 4,375 units
C) 6,250 units
D) 5,250 units

Question

Quizplus · Accepted Answer

Let TC be the total cost and X be the level of activity.
From the cost formula Y = $17,500 + $4X, we can equate TC with the formula: 
TC = $17,500 + $4X 
Substituting $42,500 for TC, we get:
$42,500 = $17,500 + $4X
$4X = $42,500 - $17,500
$4X = $25,000
X = $25,000/$4
X = 6,250 units
Therefore, the level of activity at which total cost will be $42,500 is 6,250 units, which is answer choice C.

Given the Cost Formula Y = $17,500 + $4X, at What