Question

Southington Snow Removal's cost formula for its vehicle operating cost is $1,900 per month plus $430 per snow-day. For the month of December, the company planned for activity of 16 snow-days, but the actual level of activity was 21 snow-days. The actual vehicle operating cost for the month was $11,470. The vehicle operating cost in the planning budget for December would be closest to: A. $10,930 B. $11,470 C. $8,739 D. $8,780

Answer 1

Answer:

D. $8,780

Explanation:

the budgeted expected 16 days of activity for the Snow removal's. The Budgeted will reflect cost for this level of activity.

so we have a budgeted cost of:

430 dollar per day x 16 days of activity = 6,880 variable cost

+ fixed cost in the magnitude of                1,900  

  total budgeted for Snow removal          8,780

The actual cost will be calclate with the actual days of activity.