Question

Stuchlik Catering uses two measures of activity, jobs and meals, in the cost formulas in its budget and performance reports. The cost formula for catering supplies is $430 per month plus $80 per job plus $14 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in January to be 20 jobs and 190 meals, but the actual activity was 21 jobs and 194 meals. The actual cost for catering supplies in January was $4,850. The catering supplies in the planning budget for January would be closest to:

a. $4,850
b. $4,690
c. $4,826
d. $4,619

Answer 1

Answer:

Total cost= $4,690

Explanation:

Giving the following information:

Fixed costs= $430

Cost per job= $80

Cost per meal= $14

The company expected its activity in January to be 20 jobs and 190 meals.

The cost that would appear in the planned budget is calculated using the estimated activity.

Total cost= 430 + 80*20 + 14*190

Total cost= $4,690