Ofarrell Snow Removal's cost formula for its vehicle operating cost is $1,840 per month plus $377 per snow-day. For the month of November, the company planned for activity of 14 snow-days, but the actual level of activity was 19 snow-days. The actual vehicle operating cost for the month was $9,280. The vehicle operating cost in the flexible budget for November would be closest to:
A) $9,003
B) $7,118
C) $9,280
D) $9,660

Question

Quizplus · Accepted Answer

Using the cost formula, we can calculate the flexible budget for November based on the actual activity level of 19 snow-days:
$1,840 + ($377 x 19) = $8,003
Therefore, the vehicle operating cost in the flexible budget for November would be closest to $9,003 (the closest option is A).

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