Question

Christiansen and Sons' flexible budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, utilities of $5,000, and supervisor salaries of $15,000. A flexible budget for 12,000 units of production would show:

Answer 1

Direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $15,000.

Step-by-step explanation:

For 10,000 units:

Direct materials (DM) = $50,000

Direct labor (DL) = $44,000

Utilities (U) = $5,000

Supervisor salaries (S) = $15,000.

For 12,000 units:

Direct materials (DM):

`DM=\$50,000*(12,000)/(10,000)\\DM = \$60,000`

Direct labor (DL):

`DL=\$44,000*(12,000)/(10,000)\\DL = \$52,800`

Utilities (U) = $5,000

`U=\$5,000*(12,000)/(10,000)\\U = \$6,000`

Supervisor salaries (S) = $15,000.

Salaries don't rely on production volume and, thus, should stay the same.