question archive Towne Snow Removal's cost formula for its vehicle operating cost is $1,470 per month plus $399 per snow day

Towne Snow Removal's cost formula for its vehicle operating cost is $1,470 per month plus $399 per snow day

Subject:AccountingPrice:2.86 Bought8

Towne Snow Removal's cost formula for its vehicle operating cost is $1,470 per month plus $399 per snow day. For the month of November, the company planned for activity of 13 snow days, but the actual level of activity was 9 snow days. The actual vehicle operating cost for the month was $5,230. The vehicle operating cost in the flexible budget for November would be closest to A. $6,657. B. $5,061. C. $5,230. D. $4,609.

 

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

B. $5,061. 

Step-by-step explanation

Vehicle operating cost: 
 = [Fixed cost + (Variable cost per unit × Actual snow days)]
 = [$1,470 per month + ($399 per snow day × 9 snow days)] =
 = [$1,470 + $3,591)]
 = $5,061	

                                            Actual Results      Flexible Budget
Snow days (q)                                    9                       9

Expenses:	 	

Vehicle operating cost ($1,470 + $399q)        $5,230                 $5,061