Problem

Determining flexible budget amounts Solar Stars Inc. has the following items and amount...

Determining flexible budget amounts

Solar Stars Inc. has the following items and amounts as part of its master budget at the 10,000-unit level of sales and production:

Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000

Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000

Variable factory overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000

Fixed factory overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000

Determine the total dollar amounts for the above items that would appear in a flexible budget at the following volume levels, assuming that both levels are within the relevant range:

a. 8,000-unit level of sales and production

b. 12,000-unit level of sales and production

(Hint: You must first determine the unit selling price and certain unit costs.)

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