Shelby Boat Wash's cost formula for its cleaning equipment and supplies is $2,200 per month plus $34 per boat. For the month of September, the company planned for activity of 82 boats, but the actual level of activity was 32 boats. The actual cleaning equipment and supplies for the month was $3,340. The cleaning equipment and supplies in the flexible budget for September would be closest to:

Question

Quizplus · Accepted Answer

First, we need to calculate the flexible budget for cleaning equipment and supplies:
Flexible budget = fixed cost + (variable cost per unit x actual activity)
Flexible budget = $2,200 + ($34 x 32) = $3,288

Then, we compare the flexible budget with the actual cost of cleaning equipment and supplies, which is given as $3,340. We can see that the actual cost is slightly higher than the flexible budget.

Therefore, the closest option to the cleaning equipment and supplies in the flexible budget for September would be B) $3,288.

Shelby Boat Wash's Cost Formula for Its Cleaning Equipment and Supplies