Jase Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $24,000. At 12,000 units of production, a flexible budget would show
A)variable costs of $52,800 and $29,000 of fixed costs
B)variable costs of $44,000 and $24,000 of fixed costs
C)variable costs of $52,800 and $24,000 of fixed costs
D)variable and fixed costs totaling $68,000

Question

Quizplus · Accepted Answer

Variable costs (direct labor and electric power) at 10,000 units are $44,000 ($40,000 + $4,000). To find the variable cost per unit, divide $44,000 by 10,000 units, which equals $4.40 per unit. At 12,000 units, the total variable costs would be 12,000 units * $4.40 = $52,800. Fixed costs remain unchanged at $24,000 regardless of the level of production.