Question

14) Bugos Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. Fixed Element per Month Variable Element per Revenue Employee salaries and wages Travel expenses Other expenses Customer Served S 4,200 $ 900 S 700 S 58,800 S 33,300 When the company prepared its planning budget at the beginning of March, it assumed that 40 customers would have been served. The amount shown for "Employee salaries and wages" in the planning budget for March would have been closest to: A) $91,200 B) $94,800 C) $92,600 D) $102,889

Answer 1

	Calculation of Employees’ salaries and wages cost
	Particulars	Amount
	Variable:
	No of customers to be served	40
	Variable salary and wages cost per customer	$900
	Total variable employee and wages cost (40*900) (A)	$36,000
	Add: Fixed employee and wages cost (B)	$58,800
	Total employee and wages cost (C=A+B)	$94,800
Ans	Option (B) $94,800 is correct