Blackwelder Snow Removal's cost formula for its vehicle operating cost is $1,240 per month plus $348 per snow-day. For the month of December, the company planned for activity of 12 snow-days, but the actual level of activity was 14 snow-days. The actual vehicle operating cost for the month was $6,330. The vehicle operating cost in the planning budget for December would be closest to:
A) $5,426
B) $6,112
C) $5,416
D) $6,330

Question

Quizplus · Accepted Answer

To find the cost in the planning budget for December, we need to calculate the total cost that Blackwelder Snow Removal would have expected to have at the planned level of activity, which is 12 snow-days.

Using the cost formula, we can calculate the expected cost as:

Expected cost = $1,240 + ($348 x 12) 
Expected cost = $5,416

Therefore, the vehicle operating cost in the planning budget for December would be $5,416, which is closest to option C).

Blackwelder Snow Removal's Cost Formula for Its Vehicle Operating Cost