Stuchlik Catering uses two measures of activity, jobs and meals, in the cost for

Question

Stuchlik Catering uses two measures of activity, jobs and meals, in the cost formulas in its flexible budgets. The cost formula for catering supplies is $520 per month plus $50 per job plus $10 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 15 jobs and 190 meals, but the actual activity was 17 jobs and 193 meals. The actual cost for catering supplies in January was $3,400. The catering supplies in the planning budget for January would be closest to:

$3,170

$3,300

$3,270

$3,400

Explanation / Answer

Hi,

Please find the answer as follows:

Actual Cost = 520 (Fixed Cost) + 50*15 (Total Job Cost) + 190*10 (Total Meal Cost) = 3170

Option A (3170) is correct.

Thanks.

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