Question

Khan Corporation has budgeted the unit sales for April to be 5,000 units. The sales price is $25 per unit, and production costs are $10 per unit. Monthly utility expenses are estimated to be $2,000 plus $2 per unit, whereas selling expenses are estimated to be $12,000. The company pays a monthly rent of $2,000. What would be the utility expenses on the company's flexible budget if actual unit sales for April were 6,000 units

Answer 1

$14,000

Step-by-step explanation:

Given that;

Monthly utility expenses = $2,000

Monthly utility expenses per unit = $2

Actual units = 6,000

Therefore,

The amount of utility expenses on the flexible budget for 6,000 units

= $2,000 + [ $2 × 6,000 units ]

= $2,000 + $12,000

= $14,000