Steve Company uses the following flexible budget formula for monthly repair cost: total cost = $700 + $0.40 per machine hour. The annual operating budget calls for 35,000 hours of planned machine time. Budgeted repair cost is:
A) $14,000
B) $14,700
C) $22,400
D) $22,000

Question

Quizplus · Accepted Answer

Using the flexible budget formula, we can calculate the budgeted repair cost for the year as:

Total cost = $700 + ($0.40 x 35,000) = $14,700

Therefore, the best choice is B, which is $14,700.

Steve Company Uses the Following Flexible Budget Formula for Monthly