Laramie, Inc., has an operating environment with considerable uncertainty. The company prepares the budget for several different volume levels. Laramie had the following budgeted data
$\begin{array}{lr}
\text { Budgeted variable costs per unit: } & \
\text { Direct materials } & \$ 7.00 \
\text { Direct labor } & 10.00 \
\text { Supplies } & 1.00 \
\text { Indirect labor } & 0.50 \
\text { Pnwer } & 0.05\\
\text { Budgeted fixed overhead for 2018: }\
\text { Supervision } & \$ 4,000 \
\text { Depreciation } & 3,000 \
\text { Rent } & 2,000
\end{array}$ What is the difference in total budgeted costs between the volume range of 4,000 and 5,000 units?
A)$-0-
B)$18,550
C)$1,000
D)$9,000

Question

Quizplus · Accepted Answer

The difference in total budgeted costs between the volume range of 4,000 and 5,000 units is calculated by adding the variable costs per unit for the additional 1,000 units. The variable costs per unit are $7.00 (Direct materials) + $10.00 (Direct labor) + $1.00 (Supplies) + $0.50 (Indirect labor) + $0.05 (Power) = $18.55 per unit. For 1,000 additional units, the total variable cost is 1,000 units * $18.55 = $18,550. Fixed costs do not change with the volume, so only variable costs are considered for the difference.

Laramie, Inc What Is the Difference in Total Budgeted Costs Between the Company