Christiansen and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, utilities of $5,000, and supervisor salaries of $15,000. A flexible budget for 12,000 units of production would show:
A) the same cost structure in total.
B) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $15,000.
C) total variable costs of $136,800.
D) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $18,000.

Question

Quizplus · Accepted Answer

In a flexible budget, variable costs like direct materials, direct labor, and utilities adjust with the level of production, while fixed costs like supervisor salaries remain constant.

Christiansen and Sons' Static Budget for 10,000 Units of Production