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Picozzi Snow Removal's cost formula for its vehicle operating cost is $2,060 per month plus $306 per snow-day. For the month of January, the company planned for activity of 16 snow-days, but the actual level of activity was 18 snow-days. The actual vehicle operating cost for the month was $7,720. The vehicle operating cost in the planning budget for January would be closest to:

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Answer:

Planning budget=$6,956

Explanation:

The planning budget is that which is based on the expected level of activity. It is the original budget used for planning purpose .

The planning budget for Picozzi would based on the planned activity level of 16 snow-day

The operation cost formula = 2,060 + $306 per snow-day

Planning budget  = 2,060 + (306×16)=$6,956

Planning budget=$6,956