Bugos Corporation is a service company that measures its output by the number of customers served.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of March, it assumed that 40 customers would have been served.

The amount shown for "Employee salaries and wages" in the planning budget for March would have been closest to:
A)$91,200
B)$94,800
C)$92,600
D)$102,889

Question

Bugos Corporation is a service company that measures its output by the number of customers served.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.

When the company prepared its planning budget at the beginning of March, it assumed that 40 customers would have been served.

The amount shown for "Employee salaries and wages" in the planning budget for March would have been closest to:

The amount shown for "Employee salaries and wages" in the planning budget for March would have been closest to:
A)$91,200 
B)$94,800 
C)$92,600 
D)$102,889

Quizplus · Accepted Answer

To calculate the amount for "Employee salaries and wages" in the planning budget, we need to use the formula:

Total cost = Fixed cost + (Variable cost per unit x Number of units)

Using the given cost estimates, we get:

Total cost = $80,000 + ($45 x 40)
Total cost = $80,000 + $1,800
Total cost = $81,800

Therefore, the amount shown for "Employee salaries and wages" in the planning budget for March would be closest to $94,800 (Option B). 11ea7998_5c9e_c457_911b_3b77d00dc5ee_TB2627_00_TB2627_00

Bugos Corporation Is a Service Company That Measures Its Output