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Based on past experience, Moss Company has developed the following budget formula for estimating its...

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Accounting

Based on past experience, Moss Company has developed the following budget formula for estimating its shipping expenses:

Shipping costs = $18,500 + ($0.50 lbs. shipped). The company's shipments average 14 lbs. per shipment.

The planned activity and actual activity regarding orders and shipments for the current month are given in the following schedule:

Plan Actual
Sales orders 850 830
Shipments 850 870
Units shipped 8,500 9,500
Sales $ 125,000 $ 149,000
Total pounds shipped 10,100 12,800

The actual shipping costs for the month amounted to $23,500. The appropriate monthly flexible budget allowance for shipping costs for the purpose of performance evaluation would be: (CMA adapted)

  • $23,250.

  • $28,550.

  • $23,550.

  • $24,900.

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