Burruss Company developed a static budget at the beginning of the company's accounting period based on an expected volume of 8,000 units: 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 is correct.

Question

Burruss Company developed a static budget at the beginning of the company's accounting period based on an expected volume of 8,000 units:  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 is correct.

Quizplus · Accepted Answer

Based on 8,000 units:
Total budgeted fixed costs = 8,000 units × $2.00 per unit = $16,000
This amount is unchanged if the flexible budget is prepared at a level of 10,000 units.

Burruss Company Developed a Static Budget at the Beginning of the Company's