Question

harland corporation currently produces cardboard boxes in an automated process. expected production per month is 20,000 units, direct material costs are $2.50 per unit, and manufacturing overhead costs are $15,000 per month. manufacturing overhead is all fixed costs. what are the flexible budget for 14,000 and 20,000 units, respectively? question 6 options: a) $50,000; $65,000 b) $14,000; $30,000 c) $14,000; $65,000 d) $50,000; $30,000

Answer 1

The flexible budgets for Harland Corporation at production levels of 14,000 and 20,000 units are $50,000 and $65,000 respectively, as this accounts for both variable costs and fixed manufacturing overhead costs.

Step-by-step explanation:

To calculate the flexible budget for Harland Corporation, we can follow these steps:

• Determine the variable costs per unit: Direct material costs are $2.50 per unit.
• Calculate the total variable costs for the chosen levels of production (14,000 and 20,000 units).
• Add the fixed manufacturing overhead costs of $15,000 to the total variable costs for each production level.

For 14,000 units:

• Total variable costs = 14,000 units x $2.50/unit = $35,000
• Total costs (variable + fixed) = $35,000 + $15,000 = $50,000

For 20,000 units:

• Total variable costs = 20,000 units x $2.50/unit = $50,000
• Total costs (variable + fixed) = $50,000 + $15,000 = $65,000

Therefore, the flexible budgets for 14,000 and 20,000 units are $50,000 and $65,000 respectively, which corresponds to option (a).