Question

Sherburne Snow Removal's cost formula for its vehicle operating cost is $2,510 per month plus $371 per snow-day. For the month of March, the company planned for activity of 18 snow-days, but the actual level of activity was 17 snow-days. The actual vehicle operating cost for the month was $8,460. The vehicle operating cost in the flexible budget for March would be closest to:

Answer 1

Answer:

Total cost= $8,817

Explanation:

Giving the following information:

Sherburne Snow Removal's cost formula for its vehicle operating cost is $2,510 per month plus $371 per snow-day.

The actual level of activity was 17 snow-days.

The flexible budget will adapt the standard cost to the actual usage.

Flexible budget:

Fixed costs= 2,510

Variable cost= 371*17= 6,307

Total cost= $8,817