Bebee Corporation currently produces cardboard boxes in an automated process. Expected production per month is 40,000 units, direct-material costs are $0.60 per unit, and manufacturing overhead costs are $18,000 per month. Manufacturing overhead is all fixed costs. What is the flexible budget for 20,000 and 40,000 units, respectively?

Question

Quizplus · Accepted Answer

Direct material costs are variable costs, and manufacturing overhead costs are fixed costs. The flexible budget for 20,000 units is $21,000 ($0.60 x 20,000 + $18,000), and the flexible budget for 40,000 units is $42,000 ($0.60 x 40,000 + $18,000).

Bebee Corporation Currently Produces Cardboard Boxes in an Automated Process