Question

Hemberger Corporation currently produces baseball caps in an automated process. Expected production per month is 20,000 units, direct material costs are $1.50 per unit, and fixed manufacturing overhead costs are $23,000 per month. Manufacturing overhead is allocated based on units of production. What is the flexible budget for 10,000 and 20,000 units, respectively?

Answer 1

Flexible budget for 10,000 units = $38,000

Flexible budget for 20,000 units = $53,000

Step-by-step explanation:

Hemberger's flexible budget for producing 10,000 and 20,000 units:

10,000 units 20,000 units

direct materials ($1.50 per unit) $15,000 $30,000

fixed manufacturing overhead $23,000 $23,000

total flexible budget $38,000 $53,000