John Company planned to produce 12,000 units. This level of activities required 20 set- ups at a cost of $18,000 plus $500 per set- up. Actual sales were 10,000 units, requiring 15 set- ups and 12,000 machine hours. Actual set- up cost was $26,000. _ _ is the master budget amount for set- ups.
A) $26,000
B) $28,000
C) $25,500
D) $21,000

Question

Quizplus · Accepted Answer

The master budget amount for set-ups is calculated based on the planned production level: $18,000 fixed cost + ($500 per set-up * 20 set-ups) = $28,000.

John Company Planned to Produce 12,000 Units