A summary of tanner company's flexible budget of manufacturing costs follows: 10,000 units direct materials $30,000 direct labor 35,000 variable factory overhead 15,000 fixed factory overhead 16,000 total $96,000 what would the flexible budget of manufacturing costs be at a production volume of 12,000 units?

a. $109,000

b. $80,000

c. $112,000

d. $115,200

Question

Business

Emelia White

28 October, 04:52

A summary of tanner company's flexible budget of manufacturing costs follows: 10,000 units direct materials $30,000 direct labor 35,000 variable factory overhead 15,000 fixed factory overhead 16,000 total $96,000 what would the flexible budget of manufacturing costs be at a production volume of 12,000 units?

a. $109,000

b. $80,000

c. $112,000

d. $115,200

+1

Answers (1)

Know the Answer?

Cheyenne Mays · Answer 1

The answer is c. $112,000. The quickest way to arrive at this answer is to notice that 12,000 is a 20% increase over 10,000. Fixed costs remain the same, so the flexible budge for 12,000 units is (96,000 - 16,000) *.2 + 96,000 = 112,000. A better way, or at least more generalizable, way to approach the problem is to calculate and sum the per unit cost for each variable factor, multiply that by the number of units, and then add the fixed costs. So: [ (material/unit + labor/unit + variable overhead/unit) x units] + fixed overhead = cost