Question

20. Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are: a. $125,000 fixed and $123,000 variable. b. $102,500 fixed and $150,000 variable. c. $125,000 fixed and $102,500 variable. d. $150,000 fixed and $123,000 variable. e. $150,000 fixed and $102,500 variable.

Answer 1

e. $150,000 fixed and $102,500 variable.

Step-by-step explanation:

fixed costs do not vary with output, so the fixed costs must be the same for both budgets = $150,000 (doesn't matter if production is 12,000 or 10,000 or 8,000, or 15,000 units)

variable costs per unit = $123,000 / 12,000 = $10.25

variable costs for flexible budget (10,000 units) = $10.25 x 10,000 = $102,500