Young Corporation has a high probability of operating at 44,000 activity hours d

Question

Young Corporation has a high probability of operating at 44,000 activity hours during the upcoming period, and lower probabilities of operating at 34,000 hours and 54,000 hours. The company's flexible budget revealed the following:

Young's flexible-budget formula, where Y is defined as total cost and AH represents activity hours, is (Round calculations to 2 decimals.):

Y = $242,000 + $19.10AH.

Y = $5.50AH + $24.70AH.

Y = $1,137,000.

Y = $5.50AH + $840,000.

Y = $24.60AH.

If Young operated at 39,000 activity hours, its total budgeted cost would be:

$1,054,500.

$1,038,500.

$938,000.

$1,137,000.

$1,314,500.

34,000 Hours 44,000 Hours 54,000 Hours   Variable costs $187,000       $242,000       $297,000         Fixed costs 840,000       840,000       840,000      

Explanation / Answer

1) Variable cost per unit 5.5 so Y= $5.5 AH + $840,000.0 2) total budgeted cost at 39,000 activity hours 39000*5.5   + 840,000 1054500 answer

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