Question

Based on predicted production of 28,000 units, a company anticipates $574,000 of fixed costs and $511,000 of variable costs. The flexible budget amounts of fixed and variable costs for 26,000 units are

Answer 1

$574,000 fixed costs and $474,500 variable cost

Step-by-step explanation:

According to the predicted production of 28,000 units, a company has a fixed cost of $574,000

The variable costs is $511,000

Therefore the flexible budget amount for the fixed and variable costs when 26,000 units are produced can be calculated as follows

The fixed costs still remains constant at $574,000

Variable cost = 511,000/28,000×26,000

= 18.25×26,000

= $474,500

Hence the fixed cost is $574,000 and the variable cost is $474,500