Milot Corporation Is an Oil Well Service Company That Measures

question 105

Multiple Choice

Milot 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 and the actual results of operations for April. When the company prepared its planning budget at the beginning of April, it assumed that 32 wells would have been serviced. However, 29 wells were actually serviced during April.
The "Servicing materials" in the flexible budget for April would have been closest to:

• A) $16,000
• B) $16,662
• C) $14,500
• D) $15,100

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Definitions:

Receivership

A proceeding in which a receiver is appointed for an insolvent corporation, partnership, or individual to take possession of its assets for ultimate sale and distribution to creditors.

Bankruptcy

A legal proceeding involving a person or business unable to repay outstanding debts, resulting in the distribution of assets to creditors or relief of debts.

Settlement

Transfer of assets where nominal or no consideration is involved.

Bankruptcy

A legal process through which individuals or businesses unable to meet their outstanding financial obligations are provided relief from some or all of their debts.