Question MA2.40: The following extract is taken from the delivery cost budget...
The following extract is taken from the delivery cost budget of D Limited:
Miles travelled 4,000 5,500
Delivery cost £9,800 £10,475
The flexible budget cost allowance for 6,200 miles travelled is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ }
The flexible budget cost allowance for 6,200 miles travelled is £10,790.
Miles £
High 5,500 10,475
Low 4,000 9,800
1,500 675
Variable cost per mile = £675/1,500 = £0.45
Fixed cost = £10,475 – £(0.45 × 5,500) = £8,000
Total cost for 6,200 miles = £8,000 + £(0.45 × 6,200) = £10,790