Question

Waterway Industriesbudgeted manufacturing costs for 70000 tons of steel are: Fixed manufacturing costs $50000 per month Variable manufacturing costs $12 per ton of steel Waterwayproduced 55000 tons of steel during March. How much is the flexible budget for total manufacturing costs for March?

A. $890000
B. $695000
C. $660000
D. $710000

Answer 1

Option (D) is correct.

Step-by-step explanation:

Flexible budget for 55,000 tons:

Total Manufacturing costs for 55,000 tons:

= Fixed manufacturing costs + Variable manufacturing costs

= Fixed manufacturing costs + (Tons of steel produced during march × Variable manufacturing costs per ton of steel)

= $50,000 + (55,000 tons of steel × $12 per ton)

= $50,000 + $660,000

= $710,000

Note:

• Period costs constant irrespective of tons produced.