Question

Jase Manufacturing Co.'s static budget at 7,600 units of production includes $38,000 for direct labor and $2,280 for electric power. Total fixed costs are $44,400. At 10,800 units of production, a flexible budget would show a. variable and fixed costs totaling $84,680 b. variable costs of $57,240 and $44,400 of fixed costs c. variable costs of $40,280 and $44,400 d. variable costs of $57,240 and $63,095 of fixed costs

Answer 1

Answer: (b.) variable costs of $57,240 and $44,400 of fixed costs

Step-by-step explanation:

Given:

7,600 units of production

$38,000 for direct labor

$2,280 for electric power

Total fixed costs are $44,400

We'll compute Variable Cost using the following formula :

Variable cost =
`[((Budget for direct labor + Budget for electric power))/(Units of production)] * Increased units of production`

Variable cost =
`[((38000 + 2280))/(7600)] * 10800`

Variable cost = $57,240

Fixed cost = $44,440