Asked by Aiysha Edwards on Jul 27, 2024
Verified
Dure Corporation's cost formula for its selling and administrative expense is $24,500 per month plus $1 per unit. For the month of July, the company planned for activity of 7,200 units, but the actual level of activity was 7,160 units. The actual selling and administrative expense for the month was $31,460.The selling and administrative expense in the flexible budget for July would be closest to:
A) $31,524
B) $31,460
C) $31,660
D) $31,700
Flexible Budget
A budget that is conceived to flex with variations in activity scale or volume.
Selling
The process involved in promoting and transferring ownership of a product or service to a customer in exchange for payment.
Administrative Expense
Costs associated with the general administration of a business, including salaries of non-sales personnel, office supplies, and rent, not directly tied to production or sales.
- Explore and pinpoint techniques for planning, variable, and current budgeting.
Verified Answer
Cost formula: $24,500 + ($1 x units)
Planned activity: 7,200 units
Actual activity: 7,160 units
Flexible budget:
= $24,500 + ($1 x 7,160)
= $31,660
Therefore, the closest choice is option C: $31,660.
Learning Objectives
- Explore and pinpoint techniques for planning, variable, and current budgeting.
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