ATR's budgeted product costs for the third quarter of 2010 were based on an expected volume of 1,500 units. The budgeted unit costs appear below: If ATR had a budgeted volume of 2,000 units, the total budgeted product cost for the third quarter of 2010 would have been
A) $22,000
B) $16,000
C) $20,500
D) None of the above

Question

Quizplus · Accepted Answer

To calculate the total budgeted product cost for 2,000 units, we need to use the formula:

Total budgeted product cost = Budgeted unit cost x Budgeted volume

For 2,000 units, we can calculate the total budgeted product cost for each cost element as follows:

- Direct materials: $5 x 2,000 = $10,000
- Direct labor: $2 x 2,000 = $4,000
- Variable overhead: $1.50 x 2,000 = $3,000
- Fixed overhead: $3,500

Therefore, the total budgeted product cost for 2,000 units would be:

Total budgeted product cost = $10,000 + $4,000 + $3,000 + $3,500
Total budgeted product cost = $20,500

Therefore, the best choice is C) $20,500.

ATR's Budgeted Product Costs for the Third Quarter of 2010