13) Cosden Corporation is an oil well service company that measures its output b

Question

13) Cosden Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. Fixed Element per Month Variable Element per Well Serviced Revenue Employee salaries and wages Servicing materials Other expenses S 4,700 S 1,000 S 600 S 41,300 S 40,200 When the company prepared its planning budget at the beginning of May, it assumed that 29 wells would have been serviced. However, 31 wells were actually serviced during May. The total expenses in the flexible budget for May would have been closest to: A) $133,100 B) S124,513 C) S127,900 D) S131,100

Explanation / Answer

TOTA EXPENSES OF 31 WELLS Per unit Cost No. of units Total Amount Employee Salary and wages Variable Expenses $      1,000.000 31 $              31,000 Fixed Expenses $              41,300 Servicing Material - Variable $                  600 31 $              18,600 Other Expenses - Fixed $              40,200 Total Cost $          1,31,100 Answer = Option D = $         1,31,100

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.