Asked by LaQuesha Jewell on Jul 22, 2024
Verified
Jase Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $24,000. At 12,000 units of production, a flexible budget would show
A) variable costs of $52,800 and $29,000 of fixed costs
B) variable costs of $44,000 and $24,000 of fixed costs
C) variable costs of $52,800 and $24,000 of fixed costs
D) variable and fixed costs totaling $68,000
Static Budget
A fixed budget that does not change or adjust to variations in business activity levels, often used for control purposes in stable environment operations.
Flexible Budget
A budget that adjusts or flexes with changes in the volume or activity level.
Direct Labor
The wages or salaries paid to employees who are directly involved in producing goods or providing services.
- Calculate variable and fixed costs within the flexible budgeting framework.
Verified Answer
LW
Larissa WarrenJul 27, 2024
Final Answer :
C
Explanation :
Variable costs (direct labor and electric power) at 10,000 units are $44,000 ($40,000 + $4,000). To find the variable cost per unit, divide $44,000 by 10,000 units, which equals $4.40 per unit. At 12,000 units, the total variable costs would be 12,000 units * $4.40 = $52,800. Fixed costs remain unchanged at $24,000 regardless of the level of production.
Learning Objectives
- Calculate variable and fixed costs within the flexible budgeting framework.