Cardero Midwifery's cost formula for its wages and salaries is $2,280 per month plus $348 per birth.For the month of August, the company planned for activity of 118 births, but the actual level of activity was 116 births.The actual wages and salaries for the month was $44,120.The wages and salaries in the planning budget for August would be closest to:

A) $44,881
B) $44,120
C) $43,344
D) $42,648

Question

Areana Padilla · Accepted Answer

Final Answer : C, Explanation :  To calculate the wages and salaries in the planning budget for August, we need to use the cost formula to find out how much the company would have planned to spend based on the planned activity level of 118 births:Planned wages and salaries = $2,280 + ($348 x 118) = $44,064This means that if the company had planned for 118 births in August, it would have budgeted $44,064 for wages and salaries.However, the actual activity level in August was only 116 births, so we need to adjust the planned wages and salaries accordingly:Adjusted planned wages and salaries = ($348 x 116) + $2,280 = $41,088 + $2,280 = $43,344Therefore, the best answer choice is C) $43,344, which represents the adjusted planned wages and salaries based on the actual activity level in August. Cost = Fixed cost + (Variable cost per unit × q)= $2,280 + ($348 × 118)= $43,344

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