Yes he is correct because if you do the algorithm, 0+3=3 and 20+40=60 and 60+3=63. There is no regrouping needed.
See below for pics of the answers
Since its telling you that x is the number of years and the question is "How much does the cost of milk increase EVERY YEAR" then you can conclude that the cost is increasing by 0.25 each year
The answer is C
adult: x
student: y
x+y=120
6x+4y=560