Question

Exercise 10-7 (Part Level Submission) (Video) Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for AP's expected costs at production levels of 80,000, 93,000, and 106,000 units. Variable costs Manufacturing Administrative Selling Fixed costs Manufacturing Administrative $6 per unit $4 per unit $1 per unit $148,000 $80,000 (a) Prepare a flexible budget for each of the possible production levels: 80,000, 93,000, and 106,000 units. (List variable costs before fixed costs.) APPLIANCE POSSIBLE INC. Flexible Production Cost Budget Click if you would like to Show Work for this question: Open Show Work

b) If AP sells the toaster ovens for $16 each, how many units will it have to sell to make a profit of $60,000 before taxes?

Answer 1

Flexible production Cost budget

Activity level
Production units	80000	93000	106000
variable cost
Manufacturing cost	480000	558000	636000
Administrative cost	320000	372000	424000
Selling cost	80000	93000	106000
Total variable cost	880000	1023000	1166000
Fixed cost
Manufacturing cost	148000	148000	148000
Administrative cost	80000	80000	80000
Total Fixed cost	228000	228000	228000
Total Cost	1108000	1251000	1394000

b) Required unit = (228000+60000)/(16-11) = 57600 Units