Bard Hotel bases its budgets on guest-days. The hotel's static budget for January appears below: The total cost at the activity level of 10,300 guest-days per month should be:
A)$225,570
B)$217,100
C)$217,640
D)$210,240

Question

Bard Hotel bases its budgets on guest-days. The hotel's static budget for January appears below:  The total cost at the activity level of 10,300 guest-days per month should be:
A)$225,570 
B)$217,100 
C)$217,640 
D)$210,240

Quizplus · Accepted Answer

To calculate the total cost at the activity level of 10,300 guest-days per month, we need to use the formula for flexible budget:

Flexible budget = Fixed costs + Variable costs per unit x Actual units of activity

Fixed costs = $77,000
Variable costs per guest-day = $14 + $28 = $42
Actual units of activity = 10,300

Flexible budget = $77,000 + $42 x 10,300 = $217,100

Therefore, the best choice is B.

Bard Hotel Bases Its Budgets on Guest-Days