Question

Margas Framing's cost formula for its supplies cost is $2,240 per month plus $6 per frame. For the month of May, the company planned for activity of 808 frames, but the actual level of activity was 810 frames. The actual supplies cost for the month was $7,090. The supplies cost in the flexible budget for May would be closest to:_____.a. $7,106.

b. $7,088.
c. $7,100.
d. $7,090.

Answer 1

Answer: c. $7,100

Step-by-step explanation:

Supplies cost according to the flexible budget is to be calculated based on the actual level of activity.

The cost is:

= Fixed cost + (Variable cost * actual level of activity)

= 2,240 + (6 * 810)

= 2,240 + 4,860

= $7,100