Bard Hotel bases its budgets on guest-days.The hotel's static budget for January appears below: The total fixed cost at the activity level of 10,600 guest-days per month should be:

Question

Bard Hotel bases its budgets on guest-days.The hotel's static budget for January appears below:  The total fixed cost at the activity level of 10,600 guest-days per month should be:

Quizplus · Accepted Answer

From the given static budget, we can see that the total variable cost per guest-day is $13. Therefore, the total variable cost for 10,600 guest-days would be:

Total variable cost = Variable cost per guest-day x Number of guest-days
Total variable cost = $13 x 10,600
Total variable cost = $137,800

To find the total fixed cost at this activity level, we can use the formula:

Total cost = Total fixed cost + Total variable cost

Rearranging the formula, we get:

Total fixed cost = Total cost - Total variable cost

Substituting the given values, we get:

Total fixed cost = $254,960 - $137,800
Total fixed cost = $117,160

Therefore, the best choice is C, $116,160.

Bard Hotel Bases Its Budgets on Guest-Days