Question

16) Biden 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					$	4,700
Employee salaries and wages	$	41,300			$	1,000
Servicing materials					$	600
Other expenses	$	40,200

When the company prepared its planning budget at the beginning of May, it assumed that 29 wells would have been serviced. However, 35 wells were actually serviced during May.

The total expenses in the flexible budget for May would have been closest to:

A) $133,100

B) $124,513

C) $127,900

D) $137,500

17) United Health Services cost formula for its wages and salaries is $2,280 per month plus $348 per birth. For the month of July, the company planned for activity of 118 births, but the actual level of activity was 116 births. The actual wages and salaries for the month was $44,120. The wages and salaries in the planning budget for July would be closest to:

A) $44,881

B) $44,120

C) $43,344

D) $42,648

Answer 1

PARTICULARS	FIXED	VARIBALE
EMPLOYEE SALARIES	41300	1000
SERVICING		600
OTHER EPENSE	40200
TOTAL EXPENSES FOR 35 WELLS	FIXED	VARIABLE
EMPLOYEE SALARY(35*1000)	41300	35000
SERVICING(35*600)		21000
OTHER EXEPENSE	40200
TOTAL	81500	56000
TOTLE XPENSE 137500
SO OPTION D $ 137500 IS CORRECT
2) TOTAL WAGES
FIXED	2280
VARIBALE(118*348)	41064
TOTAL	43344
SO OPTION C $ 43344 IS CORRECT