Based on past experience, Moss Company has developed the following budget formula for estimating its shipping expenses:Shipping costs = $21,000 + ($0.40 × pounds shipped). The company's shipments average 13 pounds per shipment.The planned activity and actual activity regarding orders and shipments for the current month are given in the following schedule: PlanActualSales orders900880Shipments900920Units shipped9,00010,000Sales$ 130,000$ 154,000Total pounds shipped10,60013,300The actual shipping costs for the month amounted to $26,000. The appropriate monthly flexible budget allowance for shipping costs for the purpose of performance evaluation would be:

The following information is expected to ascertain the flexible budgeted shipping cost The budgeted shipping cost is a blended cost having fixed cost of $21,000 and variable cost of $0.50 per lbs or pounds deliveredthe real pounds transported are 13,300 Under flexible budgeted genuine degree of action is taken for this situation real pounds sent The flexible budgeted shipping cost is determined beneath Flexible budgeted shipping cost = fixed cost of shipping + variable cost of shipping =$21,000 + ($0.50 x genuine pounds sent) =$21,000 + ($0.50 x 13,300) =$21,000 +$6,650 =$27,650

Answered: Based on past experience, Moss Company…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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

Shipping costs = $21,000 + ($0.40 × pounds shipped). The company's shipments average 13 pounds 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	900	880
Shipments	900	920
Units shipped	9,000	10,000
Sales	$ 130,000	$ 154,000
Total pounds shipped	10,600	13,300

The actual shipping costs for the month amounted to $26,000. The appropriate monthly flexible budget allowance for shipping costs for the purpose of performance evaluation would be:

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