Question

Ohme Framing's cost formula for its supplies cost is $1,620 per month plus $13 per frame. For the month of April, the company planned for activity of 882 frames, but the actual level of activity was 878 frames. The actual supplies cost for the month was $13,500. The supplies cost in the flexible budget for April would be closest to

Answer 1

Answer:

$13,034

Explanation:

Data provided

Fixed cost = $1,620

Variable cost per unit = $13

Number of frames = 878

The computation of supplies costs in the flexible budget is shown below:-

Supplies cost in the flexible budget = Fixed cost + Variable cost per unit × Number of frames

= $1,620 + $13 × 878

= $13,034

So, for computing the cost we simply multiply the variable cost per unit with a number of frames and after the result, we add with the fixed cost.