Figure 3-4. Botana Company constructed the following formula for monthly utility cost.
Total utility cost = $1,200 + ($8.10 ´ labor hours)
Assume that 775 labor hours are budgeted for the month of April.
Refer to Figure 3-4.Calculate the total variable utility cost for the month of April.
A)$1,200.00
B)$7,477.50
C)$6,277.50
D)$5,077.50

Question

Quizplus · Accepted Answer

To calculate the variable utility cost, we need to use the given formula which is:
Total utility cost = $1,200 + ($8.10 ´ labor hours)

Substituting the given labor hours for the month of April, we get:
Total utility cost = $1,200 + ($8.10 x 775)
= $1,200 + $6,277.50
= $7,477.50

Therefore, the total variable utility cost for the month of April is $6,277.50, which is option C.