Sherburne Snow Removal's Cost Formula for Its Vehicle Operating Cost

question 241

Multiple Choice

Sherburne Snow Removal's cost formula for its vehicle operating cost is $2,510 per month plus $371 per snow-day. For the month of March, the company planned for activity of 18 snow-days, but the actual level of activity was 17 snow-days. The actual vehicle operating cost for the month was $8,460. The vehicle operating cost in the flexible budget for March would be closest to:

• A) $8,817
• B) $9,188
• C) $8,460
• D) $8,678

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Definitions:

External Customers

Individuals or entities outside an organization that use or purchase its products or services.

Production Unit

A defined quantity of products or a segment of a manufacturing or service operation that is treated as a standard measure of output.

Departmentation

Departmentation refers to the process of dividing an organization into distinct units, departments, or sections, each responsible for different functions or tasks, to enhance efficiency and management effectiveness.

Organic

Pertaining to or characterized by a natural, flexible, and adaptive approach to organization and management, often in contrast to more structured or hierarchical methods.