Chelsa Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $23,000. At 8,000 units of production, a flexible budget would show
A)variable costs of $64,000 and $28,000 of fixed costs
B)variable costs of $64,000 and $23,000 of fixed costs
C)variable costs of $72,000 and $23,000 of fixed costs
D)variable and fixed costs totaling $107,000

Question

Quizplus · Accepted Answer

The variable costs per unit are $9 ($40,000 for direct labor + $5,000 for electric power) / 5,000 units. At 8,000 units, variable costs are $72,000 (8,000 units x $9). Fixed costs remain $23,000.