Prowse 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 Variable Element

per Month per Well Serviced

Revenue $ 4,000

Employee

salaries and wages $ 43,800 $ 1,000

Servicing materials $ 600

Other expenses $ 38,200

A total of 42 wells were actually serviced during October. The "Other expenses" in the flexible budget for October would have been closest to:

Question

Business

Audrey Wagner

6 September, 07:59

Prowse 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 Variable Element

per Month per Well Serviced

Revenue $ 4,000

Employee

salaries and wages $ 43,800 $ 1,000

Servicing materials $ 600

Other expenses $ 38,200

A total of 42 wells were actually serviced during October. The "Other expenses" in the flexible budget for October would have been closest to:

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Answers (1)

Know the Answer?

Dominick Gentry · Answer 1

Other expenses $ 38,200

Explanation:

The other expenses cost is a fixed cost. So it will not change based on the level wells serviced. It will not increase or decrease.

So it will be displayed for the full amount.