Question

Cadavieco Detailing's cost formula for its materials and supplies is $1,990 per month plus $4 per vehicle. For the month of November, the company planned for activity of 94 vehicles, but the actual level of activity was 54 vehicles. The actual materials and supplies for the month was $2,250. The materials and supplies in the planning budget for November would be closest to:

Answer 1

$2366

Step-by-step explanation:

Given the following :

Cost formular for Cadavieco for its material and supplies is $1,990 per month plus $4 per vehicle.

That is :

Cost formular : 1990 + 4x

Where 1990 is the fixed cost

4x is the variable cost which depends on x, number of vehicles.

In November :

Planned activity = 94 vehicles

Actual activity : 54 vehicles

Therefore, materials and supplies in planning budget for November :

Fixed cost + 4(planned activity)

$1990 + $4(94)

$1990 + $376

= $2366