Question

Davidson Corporation manufactured 57,600 units during September. The following fixed overhead data relates to​ September: Actual...

Davidson Corporation manufactured 57,600 units during September. The following fixed overhead data relates to​ September:

Actual

Static Budget

Production

57,600 units

57,000 units

Machine−hours

1,015 hours

1,140 hours

Fixed overhead costs for September

$52,040

$52,440

What is the flexible−budget amount?

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Answer #1

Answer

--When preparing FLexible Budget data,
>The Variable costs are calculated using ACTUAL UNITS/HOURS and BUDGETED Variable rates.
>However,
In Case of FIXED COST, Budgeted amount of Fixed Cost is taken into consideration for FLEXIBLE BUDGET too.

--This means that Flexible Budget's FIxed Cost = Static Budget Fixed Cost.

--Hence, Flexible Budget amount for 'Fixed Overhead cost for September' = $ 52,440

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