Dewberry Midwifery's cost formula for its wages and salaries is $1,960 per month plus $429 per birth. For the month of December, the company planned for activity of 128 births, but the actual level of activity was 130 births. The actual wages and salaries for the month was $56,020. The wages and salaries in the flexible budget for December would be closest to:
A) $57,761
B) $57,730
C) $56,020
D) $56,872

Question

Quizplus · Accepted Answer

The flexible budget formula for wages and salaries is:

Flexible budget = Fixed cost + (Variable cost per unit x Actual activity)

Using the given cost formula, we can calculate the flexible budget for wages and salaries as:

Flexible budget = $1,960 + ($429 x 130)
Flexible budget = $1,960 + $55,770
Flexible budget = $57,730

Therefore, the answer is B) $57,730.

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