Lynne Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $480 per month plus $91 per job plus $14 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in June to be 10 jobs and 79 meals, but the actual activity was 14 jobs and 77 meals. The actual cost for catering supplies in June was $2,970. The catering supplies in the flexible budget for June would be closest to:
A)$2,496
B)$2,970
C)$2,832
D)$3,494

Question

Quizplus · Accepted Answer

Using the cost formula, we can calculate the flexible budget for catering supplies as follows:
$480 + ($91 x 14) + ($14 x 77) = $480 + $1,274 + $1,078 = $2,832
Therefore, the closest option is choice C, $2,832.

Lynne Catering Uses Two Measures of Activity, Jobs and Meals