The correct interpretation of the function \( y = 120x + 30 \) in the context of the home security company's fees is:
\( y \) is the total cost, \( x \) is the number of months. 120 is the monthly fee and 30 is the one-time setup fee.
This statement accurately identifies \( y \) as the total cost, \( x \) as the number of months of service, and it specifies that the setup fee is $30, while the fee of $120 should actually be interpreted as the variable cost for each month of service.