Larance Detailing's cost formula for its materials and supplies is $2,230 per month plus $1 per vehicle. For the month of November, the company planned for activity of 75 vehicles, but the actual level of activity was 25 vehicles. The actual materials and supplies for the month was $2,160.
-The materials and supplies in the flexible budget for November would be closest to:
A)$2,305
B)$768
C)$2,255
D)$2,160

Question

Quizplus · Accepted Answer

We need to calculate the flexible budget for November based on the given information:

- Actual Units Produced: 4,000
- Direct Materials Cost per Unit: $0.50
- Direct Labor Cost per Unit: $0.40
- Variable Factory Overhead Cost per Unit: $0.10

Flexible Budget Formula:
Flexible Budget = Budgeted Rate x Actual Quantity

- Direct Materials Cost: $0.50 x 4,000 = $2,000
- Direct Labor Cost: $0.40 x 4,000 = $1,600
- Variable Factory Overhead Cost: $0.10 x 4,000 = $400

Total Flexible Budget for November:
$2,000 + $1,600 + $400 = $4,000

However, the question is asking for materials and supplies only. Since we know that the direct materials cost is $2,000 in the flexible budget, we need to subtract any other costs that may be included in the budget. The only other variable cost given is the variable factory overhead cost, which is not included in materials and supplies. Therefore, the closest answer is C) $2,255.

Larance Detailing's Cost Formula for Its Materials and Supplies Is