Question

Q 24.9: Fisher Steel produces steel plates for manufacturing and construction. They generally use a static budget with the following costs based on 50,000 units per month: indirect materials, $105,000; indirect labor, $98,000; utilities, $14,000; supervision, $5,000; depreciation, $22,000. If Fisher wanted to create a flexible budget for 60,000 units, what value would they record for fixed costs

Answer 1

$27000

Step-by-step explanation:

In order to make flexible budget for 60000 units we need differentiate between fixed and variable cost.

The Variable cost consist of:

Indirect Labor = $98000

Indirect materials = $105000

utilities = $14000

The Fixed cost consist of :

Depreciation Expense = $22000

Supervision = $5000

Hence, Adding Depreciation expense + Supervision (22000+5000) gives the total value of $27000 for fixed cost.