Gulland Rock Ltd Uses the Following Flexible Budget Formula for Monthly

question 100

Multiple Choice

Gulland Rock Ltd uses the following flexible budget formula for monthly repair cost: total cost = $1,500 + $0.40 per machine hour. The annual operating budget calls for 25,000 hours of planned machine time. Budgeted repair cost is:

• A) $11,500
• B) $14,700
• C) $22,400
• D) $22,000

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Definitions:

Binding Price Ceiling

A government-imposed maximum price that is set below the equilibrium price, resulting in a shortage of the good or service.

Substitute

A good or service that can replace another to satisfy similar needs or desires, often leading to competition between producers.

Consumer Surplus

The divergence between what consumers are willing to pay for a product or service and the actual payment they make.

Supply Curve

A visual display mapping out the link between how much of a good is supplied and its price.