Historically, electricity has a $300,000 fixed component and 5% of sales variable component. Next year's sales are forecasted to be $10,000,000, and an electricity budget of $800,000.

Question

Quizplus · Accepted Answer

The fixed component is $300,000, and the variable component is 5% of sales. Next year's sales are forecasted to be $10,000,000, so the variable component will be $500,000. The total electricity budget is therefore $300,000 + $500,000 = $800,000, which matches the given budget.

Historically, Electricity Has a $300,000 Fixed Component and 5% of Sales