Question

Pratte Boat Wash's cost formula for its cleaning equipment and supplies is $2,460 per month plus $49 per boat. For the month of April, the company planned for activity of 58 boats, but the actual level of activity was 18 boats. The actual cleaning equipment and supplies for the month was $3,470.
The cleaning equipment and supplies in the flexible budget for April would be closest to:

A) $3,342

B) $5,302

C) $3,470

D) $1,645

Answer 1

Answer:

Option (B) is correct.

Explanation:

Given that,

cleaning equipment and supplies is $2,460 per month plus $49 per boat.

Hence,

Cleaning equipment and supplies in flexible budget :

= (Activity planned by company × Amount per boat) + Fixed amount

= (58 boats × $49) + 2,460

= 2,842 + 2,460

= $5,302

Therefore, the cleaning equipment and supplies in the flexible budget for April would be closest to $5,302.