Flexible Budget M/C Question?

Question

The total traceable fixed and variable costs of the account billing activity centre are $245,000. Cost behaviour analysis indicates that fixed costs are $75,000. Activity analysis indicates that the cost driver for account-billing activity is the number of lines printed. The toatl lines printed is 2,500,000.

What would be the total flexible budget if the total lines printed increased to 2,600,000?

a)$176,800 b)$240,000 c)$245,000 d) $251,800

Answer 1

FC = 75k

VC = 245k of 2.5m lines = 0.068/ lines

2.6m lines means 0.068 x 2.6m = 176,800

+ Fc 75k = 251,800

D.