Question

Jones Company manufactures an executive chair. The company has budgeted variable costs of $100 for each chair and fixed costs of $7,000 per month. A static budget predicted production and sales of 200 chairs in January, but the company actually produced and sold only 180 chairs at a total cost of $26,000. Jones Company total flexible budget cost for 180 chairs per month is:

Answer 1

Total flexible budget cost=$25,000 per month

Step-by-step explanation:

The total flexible budget can be expressed as;

Total flexible budget=Total variable cost+Total fixed costs

where;

Total variable cost=Cost per chair×actual number of chairs produced and sold

Total variable cost=(100)×180=$18,000 per month

Total fixed cost=$7,000 per month

replacing;

Total flexible budget=(18,000+7,000)=$25,000

Total flexible budget cost=$25,000 per month