I am having trouble with this. I don't really know where to start/what equation to use.
Utility costs at Service, Inc. are a mixture of fixed and variable components. Records indicate that utility costs are an average of $0.40 per hour at an activity level of 9,000 machine hours and $0.25 per hour at an activity level of 18,000 machine hours. Assuming that this activity is within the relevant range, what is the expected total utility cost if the company works 13,000 machine hours?
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So I am not sure if this helps with the problem at all but I figured out how much it was total for each of those.
.40/hour at 9,000 hours = .40x9,000=$3,600 total utility cost
.25/hour at 18,000 hours=.25x18,000=$4,500 total utility cost
18,000 hours is exactly double 9,000 so....there is a variable increase of 1.25 cents per 1,000 hour?
I am completely lost as you can see. Please help with this!
Utility costs at Service, Inc. are a mixture of fixed and variable components. Records indicate that utility costs are an average of $0.40 per hour at an activity level of 9,000 machine hours and $0.25 per hour at an activity level of 18,000 machine hours. Assuming that this activity is within the relevant range, what is the expected total utility cost if the company works 13,000 machine hours?
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So I am not sure if this helps with the problem at all but I figured out how much it was total for each of those.
.40/hour at 9,000 hours = .40x9,000=$3,600 total utility cost
.25/hour at 18,000 hours=.25x18,000=$4,500 total utility cost
18,000 hours is exactly double 9,000 so....there is a variable increase of 1.25 cents per 1,000 hour?
I am completely lost as you can see. Please help with this!