Cosden Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.

Fixed Element per Month Variable Element per Well Serviced

Revenue $ 4,700

Employee salaries and wages $ 41,300 $ 1,000

Servicing materials $ 600

Other expenses $ 40,200

When the company prepared its planning budget at the beginning of May, it assumed that 29 wells would have been serviced. However, 31 wells were actually serviced during May. The total expenses in the flexible budget for May would have been closest to:

Question

Sullivan Callahan

Business

5 May, 06:56

Cosden Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.

Fixed Element per Month Variable Element per Well Serviced

Revenue $ 4,700

Employee salaries and wages $ 41,300 $ 1,000

Servicing materials $ 600

Other expenses $ 40,200

When the company prepared its planning budget at the beginning of May, it assumed that 29 wells would have been serviced. However, 31 wells were actually serviced during May. The total expenses in the flexible budget for May would have been closest to:

+3

Answers (1)

Know the Answer?

Desiree Vaughn · Answer 1

Total expense $82,996.77

Explanation:

The total expenses will be calculated as follows:

$

Variable cost

Employees Salaries and Wages (29/31 * 1,000) = 935.48

Servicing material = (29/31 * $600) = 561.29

Fixed cost (413,300 + 40200) 81,500

Total expense 82,996.77