Based on Past Experience,a Company Has Developed the Following Budget $\times$

question 38

Multiple Choice

Based on past experience,a company has developed the following budget formula for estimating its shipping expenses.The company's shipments average 12 lbs.per shipment: Shipping costs = $16,000 + ($0.50 $\times$ lbs.shipped)
The planned activity and actual activity regarding orders and shipments for the current month are given in the following schedule:
The actual shipping costs for the month amounted to $21,000.The appropriate monthly flexible budget allowance for shipping costs for the purpose of performance evaluation would be (CMA adapted)

• A)$20,680
• B)$20,920
• C)$20,800
• D)$22,150

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Definitions:

Pumpkins

A plant belonging to the squash family, often used for food, decoration, or as commodities in agricultural markets.

Constant Marginal Cost

A situation where the cost of producing an additional unit of output is the same, regardless of the volume produced.

Inverse Demand

A mathematical function that expresses the price of a good or service as a function of the quantity demanded, showing how price changes with demand.

Cournot Duopolists

Firms in a Cournot duopoly compete by choosing quantities rather than prices, assuming the quantity set by the competitor as given while deciding their own.