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15 April, 04:06

Burruss Company developed a static budget at the beginning of the company's period bases on an expected volume of 8,000 units:Revenue $4.00 per unitVariable costs $1.50 per unitContribution margin $2.50 per unit Fixed costs $2.00Net income $0.50If actual production totals 10,000 units which is within the relevant range, the flexible budget would show fixed costs of:

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  1. 15 April, 05:18
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    Total fixed cost $16,000

    unit fixed cost for 10,000 units $1.60

    Explanation:

    the budget was made for 8,000 units

    so the 2.00 dollars for fixed cost will be based on a production for 8,000 units

    total fixed cost: 8,000 budgeted units x $2 per unit = 16,000

    This is the level of fixed cost.

    For 10,000 units the total fixed cost should be the same.

    and for units it will be total cost / units of production

    16,000 / 10,000 = 1.6

    On unit-level it will drop by 40 cent to $1.60 from $2.00
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