Question

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 89,000, 103,000, and 117,000 units.

Variable costs
Manufacturing		$7 per unit
Administrative		$4 per unit
Selling		$2 per unit
Fixed costs
Manufacturing		$151,000
Administrative		$77,000

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.) Prepare a flexible budget for each of the possible production levels: 89,000, 103,000, and 117,000 units. (List va APPLIANCE POSSIBLE INC. Flexible Production Cost Budget Activity Level Production Levels Variable Costs Manufacturing Administrative Selling Total Variable Costs Fixed Costs Manufacturing Administrative Total Fixed Costs Total Costs

If AP sells the toaster ovens for $17 each, how many units will it have to sell to make a profit of $208,000 before taxes? Units to be sold

Answer 1

APPLEANLE POSSIBLE INC Flexible Production Cost Budget Acdiuity renel Production lendes 89 050 LOBUDO 11fcrovate Casable costs Manufacturing & 6 23000 $721000 $819000 adrinstrative &356000 $412000 & 4 68000 OLIO $206000 Selling 81 78000 $234000 Total llenable cost $115 7000 $1339000 $1521000 Foxed Costs manufaching & 15luoD & ISIDO $150.000 Adronstrative & toro & ftoo & fitorno Total Fixed Costs 8228000 $228000 $228000 Total Costs $1385000 $156 Fero $1749000 touster ovens relly pre - $ If each how many wits required to sale to cem profit of $208, ooo before taxes a no tal cost & 1385000 & 156 foro $ 124900 prost Requird $208000 $2o8uvo $208000 $ 1593000 $1f75000 $195 foro unit hold to Corn Profl of 8208m 93706. 104412 115, 118 before taxes a Unite Unite