A master budget shows a total of $140,000 in variable costs and $100,000 in fixed costs for an activity level of 10,000 units. A flexible budget based on 12,000 units will show $ in variable costs and $ in fixed costs. (Enter your answers as whole numbers.)
Question
A master budget shows a total of 100,000 in fixed costs for an activity level of 10,000 units. A flexible budget based on 12,000 units will show in fixed costs. (Enter your answers as whole numbers.)
Solution
The variable cost per unit can be calculated by dividing the total variable costs by the activity level. In this case, that would be 14 per unit.
For a flexible budget based on 12,000 units, the variable costs would be 12,000 units * 168,000.
Fixed costs do not change with the level of activity, so the fixed costs would remain at $100,000.
So, a flexible budget based on 12,000 units will show 100,000 in fixed costs.
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