Buckson Framing's cost formula for its supplies cost is $1,350 per month plus $18 per frame. For the month of June, the company planned for activity of 716 frames, but the actual level of activity was 713 frames. The actual supplies cost for the month was $14,820. The supplies cost in the flexible budget for June would be closest to:
A) $14,820
B) $14,184
C) $14,178
D) $14,238

Question

Quizplus · Accepted Answer

The flexible budget for supplies cost is calculated as the fixed cost plus the variable cost per unit times the actual number of units. Therefore, for 713 frames, the calculation is $1,350 (fixed cost) + $18 (variable cost per frame) * 713 (actual frames) = $1,350 + $12,834 = $14,184.

Buckson Framing's Cost Formula for Its Supplies Cost Is $1,350