Question

The Skulls, a student social organization, has two different locations under consideration for constructing a new chapter house. The Skulls' president, a POM student, estimates that due to differing land costs, utility rates, etc., both fixed and variable costs would be different for each of the proposed sites, as follows: Location Annual Fixed Variable Alpha Ave. $ 5,000 $ 200 per person Beta Blvd. $ 8,000 $ 150 per person What would be the total annual costs for the Alpha Ave. location with 20 persons living there

Answer 1

The total annual cost for Alpha Ave. at 20 persons is $9000.

Step-by-step explanation:

The total cost is made up of both the fixed and the variable costs.

The total cost equation for Alpha Ave can be written as,

Total Annual cost = 5000 + 200x

Where x is the number of persons living in the Alpha Ave.

Thus, at 20 persons living in the Alpha Ave, the ytotal annual cost will be,

Total Annual Cost-Alpha Ave. = 5000 + 200 * (20) = $9000