Question

Based on predicted production of 25,100 units, a company anticipates $280,000 of fixed costs and $502,000 of variable costs. If the company actually produces 18,400 units, what are the flexible budget amounts of fixed and variable costs? ------Flexible Budget------ ------Flexible Budget at ------ Variable Amount per Unit Total Fixed Cost 25,100 units 18,400 units 20.00 Variable cost Fixed costs 502,000 280,000 782,000 Total budgeted costs $ $ 0

Answer 1

Ans. 1		Flexible Budget		Flexible Budget At units
		Variable amount	Total fixed	25,100	18,400
		per unit	cost
	Variable cost	$20		$502,000	$368,000
	Fixed costs		$280,000	$280,000	$280,000
	Total budgeted cost	$20	$280,000	$782,000	$648,000
	*Total fixed cost and variable cost per unit always remains constant on each level of activity or units.
	Variable cost per unit = Variable cost / Predicted production
	$502,000 / 25,100
	$20   per unit
		Flexible Budget At units
		25,100	18,400
	Variable cost ($20 * units)	25,100 * $20	18,400 * $20
Ans. 2		Flexible Budget		Flexible Budget At units
		Variable amount	Total fixed	21,800	27,800
		per unit	cost
	Sales	$20		$436,000	$556,000
	Variable cost	$3		$65,400	$83,400
	Contribution margin	$17		$370,600	$472,600
	Fixed costs		$141,000	$141,000	$141,000
	Income from operations			$229,600	$331,600
	*Selling price per unit = Sales / Sales units
	$436,000 / 21,800
	$20	per unit
	Total sales   =   Selling price per unit * Flexible budget units
		Flexible Budget At units
		21,800	27,800
	Total sales ($20 * units)	$436,000	$556,000
	Variable cost per unit = Variable cost / Predicted production
	$65,400 / 21,800
	$3	per unit
		Flexible Budget At units
		21,800	27,800
	Variable cost ($3 * units)	$65,400	$83,400
	*Total fixed cost and variable cost per unit always remains constant on each level of activity or units.