Scott Company uses the following formula for annual maintenance costs:
Total cost = $6,000 + $0.70 per machine hour
The current month’s budget is based on planned machine time of 30,000 hours. Monthly maintenance cost included in this budget is

Answer (C) is correct. The maintenance cost is a mixed cost containing both fixed and variable elements. To calculate the monthly total fixed costs, divide the annual amount by 12.

Monthly fixed maintenance costs: $6,000 ÷ 12 = $ 500

Variable maintenance costs: 30,000 × $0.70/hour = 21,000

Total maintenance costs $21,500