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: $$\begin{array} { l c c }
\text { Location } & \text { Annual Fixed } & \text { Variable } \
\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { perperson } \
\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { per person }
\end{array}$$
What would be the total annual costs for the Alpha Ave. location with 20 persons living there?
A) $5,400
B) $4,000
C) $5,000
D) $7,000
E) $9,000

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: $$\begin{array} { l c c } 
\text { Location } & \text { Annual Fixed } & \text { Variable } \
\hline \text { Alpha Ave. } & \$ 5,000 & \$ 200 \text { perperson } \
\text { Beta Blvd. } & \$ 8,000 & \$ 150 \text { per person }
\end{array}$$
What would be the total annual costs for the Alpha Ave. location with 20 persons living there?
A) $5,400
B) $4,000
C) $5,000
D) $7,000
E) $9,000

Quizplus · Accepted Answer

The total annual cost for Alpha Ave. is calculated by adding the fixed cost to the product of the variable cost per person and the number of persons: $5,000 + ($200 * 20) = $9,000.

The Skulls, a Student Social Organization, Has Two Different Locations