Question

The Baum and the Freeman families are comparing their electric bills for the past month. The Baum family is on a standard use plan and the Freeman family is on an interval use plan. Each family’s usage is listed on the chart below:

Standard Use Plan
Interval Use Plan
8.5 cents/kWh for the first 400 kWh
12 cents/kWh for the next 400 kWh
14.5 cents/kWh for anything over 800 kWh
On-peak hours - 13 cents/kWh
Off-peak hours - 2 cents/kWh

Both families use 1250 kWh for the given 30 day period. The Freeman family uses 400 kWh during on-peak hours and 850 during off-peak hours. Which family ends up paying more for their utilities? How much more?
a.
The Freeman family pays $260.83 more than the Baum family.
b.
The Freeman family pays $250.00 more than the Baum family.
c.
The Baum family pays $69.00 more than the Freeman family.
d.
The Baum family pays $78.25 more than the Freeman family.

Answer 1

Compute each family's bill:

Baum (standard):
- 400 kWh × $0.085 = $34.00
- 400 kWh × $0.12 = $48.00
- 450 kWh × $0.145 = $65.25
Total = $34.00 + $48.00 + $65.25 = $147.25

Freeman (interval):
- 400 kWh on-peak × $0.13 = $52.00
- 850 kWh off-peak × $0.02 = $17.00
Total = $69.00

Difference: $147.25 − $69.00 = $78.25.

Answer: d. The Baum family pays $78.25 more than the Freeman family.