Question

Cadavieco Detailing's cost formula for its materials and supplies is $2,090 per month plus $15 per vehicle. For the month of November, the company planned for activity of 89 vehicles, but the actual level of activity was 49 vehicles. The actual materials and supplies for the month was $2,660. The materials and supplies in the planning budget for November would be closest to:

A. $5,016
B. $2,825
C. $2,660
D. $3,425

Answer 1

Answer:

The materials and supplies in the planning budget for November

= $2,090 + $15 per vehicle

= $2,090 + $15 x 89 vehicles  

=  $2,090 + $1,335

=  $3,425      

The correct answer is D                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Explanation:

The materials and supplies in the planning budget are comprised of a                 fixed cost of $2,090 plus a variable cost of $15 per vehicle. The number of vehicle budgeted for was 89 vehicles. Thus, the materials and supplies in the planning budget will be $2,090 plus $1,335 x  89 vehicles.