Asked by Donna Pollock on Jun 26, 2024
Verified
Technical Engineering presently leases a copying machine on a monthly basis. The lease agreement requires a fixed fee each month in addition to a charge per copy. Technical Engineering made 2400 copies and paid a total of $162 in rent in September and in October they paid $195 for 3500 copies. Determine Technical Engineering's variable cost per copy.
A) $0.06
B) $0.04
C) $0.03
D) $0.01
Variable Cost
Costs that vary directly with the level of production or service activity, such as materials and labor.
Per Copy
"Per copy" refers to the cost or price of each individual unit when items are produced, sold, or purchased in multiple units or batches.
- Acquire knowledge on cost estimation methods, including visual fit and regression analysis.
- Utilize cost data to compute and predict cost behavior in distinct situations.
Verified Answer
NM
Najma MohamedJun 30, 2024
Final Answer :
C
Explanation :
Let's assume that the fixed fee per month is X dollars and the variable cost per copy is Y dollars.
From the problem, we know that:
September rent = fixed fee + (2400 * Y) = X + 2400Y = 162
October rent = fixed fee + (3500 * Y) = X + 3500Y = 195
We can then solve for X and Y using simultaneous equations:
X + 2400Y = 162
X + 3500Y = 195
Subtracting the first equation from the second, we get:
1100Y = 33
Y = 0.03
Substituting Y back into either equation, we can solve for X:
X + 2400(0.03) = 162
X = 78
Therefore, the fixed fee is $78 per month and the variable cost per copy is $0.03.
The correct choice is C.
From the problem, we know that:
September rent = fixed fee + (2400 * Y) = X + 2400Y = 162
October rent = fixed fee + (3500 * Y) = X + 3500Y = 195
We can then solve for X and Y using simultaneous equations:
X + 2400Y = 162
X + 3500Y = 195
Subtracting the first equation from the second, we get:
1100Y = 33
Y = 0.03
Substituting Y back into either equation, we can solve for X:
X + 2400(0.03) = 162
X = 78
Therefore, the fixed fee is $78 per month and the variable cost per copy is $0.03.
The correct choice is C.
Learning Objectives
- Acquire knowledge on cost estimation methods, including visual fit and regression analysis.
- Utilize cost data to compute and predict cost behavior in distinct situations.