Question

Timothy, LLC, originally budgeted $10,000 of costs to produce 100 toy cars. $5,000 of these costs consisted of direct labor, $1,000 consisted of raw materials, and $3,000 consisted of fixed licensing and rental costs. Timothy, LLC also budgeted $30,000 of revenue from the sale of these cars. Timothy, LLC actually produced and sold 160 toy cars (no beginning or ending FG or WIP inventory). What is the flexible budget amount of raw materials?

Answer 1

$1,600

Step-by-step explanation:

Budgeted raw material cost per toy car:

= Total budgeted raw material cost ÷ Budgeted production(in units)

= $1,000 ÷ 100 toy cars

= $10 per toy car

Flexible budget of raw material:

= Actual number of toy cars sold × Budgeted raw material cost per toy car

= 160 × $10 per toy car

= $1,600

Therefore, the flexible budget amount of raw materials is $1,600.