To estimate the monthly maintenance cost for the maintenance department in a hospital,the following monthly costs are available:
$\begin{array}{ll}\text { Monthly Expense }&\text { Costs }\
\text { Supervisor Salary Expense } & \$ 3,000 \
\text { Depreciation Expense-Maintenance Equipment } & \$ 5,000 \
\text { Repairs Expense-Maintenance Equipment } & \$ 5,000 \
\text { Supplies Expense } & \$ 7,000 \
\text { Wages Expense-Maintenance Workers } & \$ 10,000
\end{array}$
The Supervisor Salary Expense and the Depreciation Expense are fixed costs.The remaining expenses are variable costs.There are 1,000 patient days in a month,which is the cost driver for maintenance costs.Estimate the cost function where Y is the monthly maintenance cost and X is the variable cost per patient day.
A) Y = $8 + $22X
B) Y = $8,000 + $22,000X
C) Y = $8,000 + $22X
D) Y = $30,000 + $22,000X

Question

Quizplus · Accepted Answer

Fixed costs are the sum of Supervisor Salary Expense ($3,000) and Depreciation Expense ($5,000), totaling $8,000. Variable costs are the sum of Repairs Expense ($5,000), Supplies Expense ($7,000), and Wages Expense ($10,000), totaling $22,000. Since there are 1,000 patient days, the variable cost per patient day is $22,000 / 1,000 = $22. Therefore, the cost function is Y = $8,000 + $22X.

To Estimate the Monthly Maintenance Cost for the Maintenance Department