Cadavieco Detailing\'s cost formula for its materials and supplies is $2,040 per

Question

Cadavieco Detailing's cost formula for its materials and supplies is $2,040 per month plus $9 per vehicle. For the month of November, the company planned for activity of 99 vehicles, but the actual level of activity was 59 vehicles. The actual materials and supplies for the month was $2,890.

The materials and supplies in the flexible budget for November would be closest to:

$1,706

$2,571

$2,890

$2,931

Cadavieco Detailing's cost formula for its materials and supplies is $2,040 per month plus $9 per vehicle. For the month of November, the company planned for activity of 99 vehicles, but the actual level of activity was 59 vehicles. The actual materials and supplies for the month was $2,890.

Explanation / Answer

The materials and supplies in the flexible budget = Standard price * Actual level of activity

= 2040 + (9 * 59)

= 2040 + 531

= $ 2571

Conclusion:- The materials and supplies in the flexible budget for November = $ 2571

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