Del's Diner anticipated that 84,000 process hours would be worked during an upcoming accounting period when, in fact, 90,000 hours were actually worked. One of the company's cost functions is expressed as follows: Y = $16PH + $640,000 where PH is defined as process hours What is Del's flexible budget for the preceding cost function? A. $1,280,000 B. $2,080,000 C. $1,984,000 D. $1,221,000 E. $2,112,000

Question

Business

Yurem Phelps

29 April, 00:49

Del's Diner anticipated that 84,000 process hours would be worked during an upcoming accounting period when, in fact, 90,000 hours were actually worked. One of the company's cost functions is expressed as follows: Y = $16PH + $640,000 where PH is defined as process hours What is Del's flexible budget for the preceding cost function? A. $1,280,000 B. $2,080,000 C. $1,984,000 D. $1,221,000 E. $2,112,000

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Zackary Willis · Answer 1

Answer B.

Explanation:

Flexible budget adjust or changes with changes in business activity. It is more sophisticated and useful than the static budget. For those parts of the equation that are variable, the budget itself will change while fixed parts will stay the same. Therefore if the actual amount of working hours was 90,000 and the cost function is 16$*90,000 + 640,000$, than the flexible budget is 2,080,000 dollars.