Rodgers Mfg. Co. prepares a flexible budget. The original budget forecasted sales of 100,000 units @ $20, and operating expenses of $300,000 fixed, plus $2 per unit. Production also was budgeted at 100,000 units. Actual sales and production for the period totaled 110,000 units. When the budget is adjusted to reflect these new activity levels, which of the following budgeted amounts will increase, but by less than 10 percent?

Question

Quizplus · Accepted Answer

Total operating expenses will increase by less than 10 percent because the fixed costs remain constant, and only the variable costs increase with the additional units.