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, 104,000, and 119,000 units. Variable costs Manufacturing $6 per unit Administrative $3 per unit Selling $1 per unit Fixed costs Manufacturing $160,000 Administrative $72,000 (a) Prepare a flexible budget for each of the possible production levels: 89,000, 104,000, and 119,000 units. (List variable costs before fixed costs.) APPLIANCE POSSIBLE INC. Flexible Production Cost Budget $

Prepare a flexible budget for each of the possible production levels: 89,000, 104,000, and 119,000 units. (List variable costs before fixed costs.)

Answer 1

Flexible production cost budget

Activity level
Unit produced	89000	104000	119000
Variable cost
Manufacturing	534000	624000	714000
Administrative	267000	312000	357000
Selling	89000	104000	119000
Total variable cost	890000	1040000	1190000
Fixed cost
Manufacturing	160000	160000	160000
Administrative	72000	72000	72000
Total fixed cost	232000	232000	232000
Total Cost	1122000	1272000	1422000