Question

Tulip Midwifery's cost formula for its wages and salaries is $2,640 per month plus $606 per birth. For the month of January, the company planned for activity of 181 births, but the actual level of activity was 192 births. The actual wages and salaries for the month was $119,625. The wages and salaries in the flexible budget for January would be closest to:

Answer 1

Answer:

$112,326

Explanation:

The computation of wages and salaries is shown below:-

For computing the total wages and salaries first we need to find out the variable cost which is here below:-

Variable cost = Activity Births × Per birth

= 181 × $606

= $109,686

Total wages and salaries = Fixed cost + Variable cost

= $2,640 + $109,686

= $112,326

So, for computing the total wages and salaries we simply applied the above formula.