The original budget was set at 15,000 units and estimated variable overheads at $345,000 ($23 per unit). If actual output is 16,000 units, calculate the variable overhead total and unit cost that would be shown in a budget flexed to actual output.

Question

Quizplus · Accepted Answer

The flexed budget for variable overheads would be calculated based on the actual output. Since the original budget was based on $23 per unit for 15,000 units, for 16,000 units, it would be 16,000 units * $23 = $368,000. The unit cost remains the same at $23 because variable costs per unit do not change with the level of output.

The Original Budget Was Set at 15,000 Units and Estimated