Question

Fancy Nail's monthly rent is $2,500. The company's static budget is based on an activity level of 2,000 manicures per month. It shows nail technician wages (a variable cost) of $20,000. Fancy Nails' flexible budget for 2,200 manicures will show ______.

Answer 1

The flexible budget for Fancy Nail's 2,200 manicures would be $24,500.

Step-by-step explanation:

The flexible budget for Fancy Nail's 2,200 manicures can be determined by using the formula:

Flexible budget amount = (Variable cost per unit x Actual activity level) + Fixed cost

In this case, the variable cost per unit is $20,000/2,000 = $10 per manicure. Therefore, the flexible budget for 2,200 manicures would be:

Flexible budget amount = ($10 x 2,200) + $2,500 = $22,000 + $2,500 = $24,500.