Robyn Pike developed a budget for 1998 for her Sun City Pharmacy. Her accounting firm has provided the following report for the first quarter of 1998:

Pharmacists salaries are considered fixed because they receive no overtime pay for extra hours worked.

Required:
1. What was the cost function that allowed her to create the 1998 budget?
2. What was the budgeted and actual average cost of filling a prescription for the first quarter of 1998?
3. Using her cost function and the actual first quarter 1998 activity level, what amounts should have been budgeted for filling 22,000 prescriptions?
4. Prepare a revised budget and compare it to her actual costs to find a new difference between budgeted and actual expenses. Comment.

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Number of prescriptions filled Pharmacists salaries. Variable overhead costs. Fixed overhead costs. (Over) Budget Actual Under 20,000 22,000 (2,000) $ 60,000 20,000 $ 66,000 $ (6,000) 60,000 21,500 59,000 (1,500) 1,000