15) Dreckman Corporation is a service company that measures its output by the nu

Question

15) Dreckman Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for August. Variable Element Actual Total Fixed Element per per Customer for August Month Served Revenue Employee salaries and wages Travel expenses Other expenses S 4,000 S 125,500 s 900 S 74,700 S 600 S 18,800 S 33,500 S 46,600 $ 33,100 When the company prepared its planning budget at the beginning of August, it assumed that 36 customers would have been served. However, 31 customers were actually served during August. The "Other expenses" in the flexible budget for August would have been closest to A) $33,500 B) S38,903 C) $28,847 D) S33,100

Explanation / Answer

Budget for Other expenses which is fixed expenses will not change even if the no of customers change as it is fixed Hence $33,100 is correct

Hence Option D correct

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