Question

Sunnyside Detailing's cost formula for its materials and supplies is $1,950 per month plus $14 per vehicle. For the month of August, the company planned for activity of 90 vehicles, but the actual level of activity was 55 vehicles. The actual materials and supplies for the month was $2,490. The materials and supplies in the flexible budget for August would be closest to: Multiple Choice $2,490 $3,210 $2,720 $1,855

Answer 1

Flexible budget cost materials and supplies= $2,720

Step-by-step explanation:

In the flexible budget, we need to multiply the standard quantities by the actual activity.

Standard cost formula:

materials and supplies= 1,950 + 14*x

x= number of vehicles

For 55 vehicles:

Flexible budget cost= 1,950 + 14*55

Flexible budget cost= $2,720