KirbyCor's budgeted income statement for 2017 follows: $\begin{array}{lr}\text { Sales }(80,000 \text { units) }&&\$400,000\\text { Less: }\
\text { Direct materials } & \$ 120,000 \
\text { Direct labor } & 80,000 \
\text { Variable overhead } & 40,000 \
\text { Fixed costs } & 80,000&320,000 \
\text { Income before taxes }&&\$80,000
\end{array}$ How much would be reported for total variable costs on a flexible budget at 75,000 units?

Question

Quizplus · Accepted Answer

Total variable costs at 80,000 units are the sum of direct materials, direct labor, and variable overhead, which equals $240,000. To find the variable cost per unit, divide $240,000 by 80,000 units, resulting in $3 per unit. For 75,000 units, the total variable costs would be 75,000 units * $3 per unit = $225,000.

KirbyCor's Budgeted Income Statement for 2017 Follows How Much Would Be Reported for Total Variable Costs on }(80,000