Summer Corporation is an oil well service company that measures its output by the number of wells serviced. The company hasprovided the following fixed and variable cost estimates that it uses for budgeting purposes.RevenueEmployee salaries and wagesServicing materialsOther expensesO $87,000$88,750Fixed Element perMonthO $90,650O $89,888S 57,400S 35,400When the company prepared its planning budget at the beginning of December, it assumed that 35 wells would have beenserviced. However, 33 wells were actually serviced during December.The "Employee salaries and wages" in the flexible budget for December would have been closest to:Variable Elementper Well Serviced.SS4,500950700

The flexible budget records the budgeted costs for actual production level. The spending variance is…

Summer Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. Revenue Employee salaries and wages Servicing materials Other expenses Fixed Element per Month S 57,400 S 35,400 Variable Element per Well Serviced. S S S 4,500 950 700 When the company prepared its planning budget at the beginning of December, it assumed that 35 wells would have been serviced. However, 33 wells were actually serviced during December. The "Employee salaries and wages" in the flexible budget for December would have been closest to:

Summer Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. Revenue Employee salaries and wages Servicing materials Other expenses Fixed Element per Month S 57,400 S 35,400 Variable Element per Well Serviced. S S S 4,500 950 700 When the company prepared its planning budget at the beginning of December, it assumed that 35 wells would have been serviced. However, 33 wells were actually serviced during December. The "Employee salaries and wages" in the flexible budget for December would have been closest to:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Summer Corporation is an oil well service company that measures its output by the number of wells serviced. The company has
provided the following fixed and variable cost estimates that it uses for budgeting purposes.
Revenue
Employee salaries and wages
Servicing materials
Other expenses
O $87,000
$88,750
Fixed Element per
Month
O $90,650
O $89,888
S 57,400
S 35,400
When the company prepared its planning budget at the beginning of December, it assumed that 35 wells would have been
serviced. However, 33 wells were actually serviced during December.
The "Employee salaries and wages" in the flexible budget for December would have been closest to:
Variable Element
per Well Serviced.
S
S
4,500
950
700

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