Question

1a)

begin using a flexible budgeting system, rather than use only the current master budget. The Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants following data are available for AP's expected costs at production levels of 89,000, 103,000, and 117,000 units Variable costs $7per unit $3 per unit Manufacturing Administrative Selling $2 per unit Fixed costs $134,000 Manufacturing Administrative $71,000 Part 1 Prepare a flexible budget for each of the possible production levels: 89,000, 103,000, and 117,000 units. (List variable costs before fixed costs) APPLIANCE POSSIBLE INC. Flexible Production Cost Budget $ $

1b)

2)

Answer 1

Part-1(a) :Flexible Budget
Particular	Per Unit cost	Amount	Amount	Amount
Production Level		89000	103000	117000
Variable cost
Manufacturing	$7.00	$623,000.00	$721,000.00	$819,000.00
Administrative	$3.00	$267,000.00	$309,000.00	$351,000.00
Selling	$2.00	$178,000.00	$206,000.00	$234,000.00
Total Variable Cost	$12.00	$1,068,000.00	$1,236,000.00	$1,404,000.00
Fixed Cost
Manufacturing		$134,000.00	$134,000.00	$134,000.00
Administrative		$71,000.00	$71,000.00	$71,000.00
Total Fixed Cost		$205,000.00	$205,000.00	$205,000.00
Totaal Cost		$1,273,000.00	$1,441,000.00	$1,609,000.00

Part-1(b)

Contribution Margin Ratio= Sales- Variable cost

$16-$12= $4

Unit to be Sold= (fixed Cost+ Target Profit)/Contributon Margin per Unit

(205000+240600)/$4=111400 Unit

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