If the master budget prepared at a volume level of 20,000 units includes factory rent of $40,000,a flexible budget based on a volume of 21,000 units would include factory rent of $40,000.

Question

Quizplus · Accepted Answer

Factory rent is a fixed cost that does not change with the level of production, so it would remain the same in a flexible budget regardless of the volume level. Therefore, the flexible budget based on a volume of 21,000 units would also include factory rent of $40,000.

If the Master Budget Prepared at a Volume Level of 20,000