Tulip Midwifery's cost formula for its wages and salaries is $2,420 per month plus $388 per birth. For the month of January, the company planned for activity of 119 births, but the actual level of activity was 123 births. The actual wages and salaries for the month was $50,540. The wages and salaries in the flexible budget for January would be closest to:
A)$50,540
B)$48,592
C)$50,144
D)$50,225

Question

Quizplus · Accepted Answer

To calculate the flexible budget for wages and salaries, we need to use the cost formula and the actual level of activity.

Using the cost formula:

Total cost = $2,420 + ($388 x Actual level of activity) 
Total cost = $2,420 + ($388 x 123) 
Total cost = $2,420 + $47,724 
Total cost = $50,144

Therefore, the wages and salaries in the flexible budget for January would be closest to $50,144, which is closest to option C.

Tulip Midwifery's Cost Formula for Its Wages and Salaries Is