Question

developed a static budget at the beginning of the company's accounting period based on an expected volume of 8,000 units: Per Unit Revenue $ 4.00 Variable costs 1.50 Contribution margin $ 2.50 Fixed costs 2.00 Net income $ 0.50 If actual production totals 10,000 units, which is within the relevant range, the flexible budget would show fixed costs of: A. $16,000. B. $2 per unit. C. $20,000. D. None of these answers are correct.'

Answer 1

$16,000.

Step-by-step explanation:

Given:

Expected total production = 8,000 units

Revenue = $4 per unit

Variable costs = 1.50 per unit

Contribution margin = $2.50 per unit

Fixed costs = $2 per unit

Net income = $0.50 per unit

Actual total production = 10,000 units

Computation:

Based expected total production = 8,000 units

Total expected fixed costs = 8,000 units × $2

Total expected fixed costs = $16,000

Fixed cost will never change .

Answer 2

Flexible cost is equal to $16000

Therefore option (d) will be correct answer

Step-by-step explanation:

It is given expected volume = 8000 units

Per unit revenue = $4

Variable cost = $1.50

Contribution margin = $2.50

Fixed cost per unit = $2

We have to find flexible budget which show fixed cost

Flexible cost is equal to =
`=8000* $2=$16000`

Therefore option (A) is the correct answer.