Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are:
A) $125,000 fixed and $102,500 variable.
B) $125,000 fixed and $123,000 variable.
C) $102,500 fixed and $150,000 variable.
D) $150,000 fixed and $123,000 variable.
E) $150,000 fixed and $102,500 variable.

Question

Quizplus · Accepted Answer

Fixed costs remain constant regardless of production level, so they stay at $150,000. Variable costs are $123,000 for 12,000 units, so for 10,000 units, they are (10,000/12,000) * $123,000 = $102,500.

Based on Predicted Production of 12,000 Units, a Company Anticipates