Whit Catering uses two measures of activity, jobs and meals, in the cost formula
ID: 2487545 • Letter: W
Question
Whit Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $380 per month plus $94 per job plus $11 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in October to be 20 jobs and 216 meals, but the actual activity was 19 jobs and 221 meals. The actual cost for catering supplies in October was $4,790. The catering supplies in the flexible budget for October would be closest to: A. $4,404 B. $4,790 C. $4,636 D. $4,597 EXPLAIN ANSWER
Explanation / Answer
Cost = Fixed cost + Variable cost per unit 1 q 1 + Variable cost per unit 2 q 2
= $380 + $94 *19 + $11*221 = $4,597
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