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. If Botana Company incurs 9,600 labor hours for the year, what would be the estimate of total utility cost?
A) $76,560
B) $78,960
C) $92,160
D) none of these are correct

Question

Quizplus · Accepted Answer

To calculate the estimate of total utility cost for the year, we need to multiply the hourly rate ($8.10) with the total budgeted labor hours (9,600), and then add the fixed cost ($1,200) to it.

Total utility cost for the year = $1,200 + ($8.10 x 9,600) = $1,200 + $77,760 = $78,960

Therefore, the best choice is B.