Loomer Catering uses two measures of activity, jobs and meals, in the cost formu

Question

Loomer 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 $550 per month plus $95 per job plus $21 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 July to be 12 jobs and 136 meals, but the actual activity was 13 jobs and 137 meals. The actual cost for catering supplies in July was $4,770. The catering supplies in the planning budget for July would be closest to: A. $4,403 $4,770 C. $4,662 D. $4,546

Explanation / Answer

D. $4,546

Cost = Fixed Cost + (Variable Cost per Job * No. of Jobs) + (Variable Cost per meal * No. of Meals)

Cost = $550 + ($95*12) + ($21*136)

Cost = $4,546

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