Question

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:

Answer 1

Answer: $5061

Explanation:

The vehicle operating cost in the flexible budget for November would be calculated as:

= Fixed cost + (Variable cost per unit × Quantity)

= $1470 + ($399 × 9)

= $1470 + $3591

= $5061

Therefore, the vehicle operating cost in the flexible budget for November would be closest to $5061.