Scott Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $25,000. At 12,000 units of production, a flexible budget would show:

Question

Quizplus · Accepted Answer

To calculate the flexible budget, we need to first determine the variable cost per unit:

Variable cost per unit = (Total variable costs - Fixed costs) / Number of units produced

Variable cost per unit = ($40,000 + $4,000 - $25,000) / 10,000 = $1.90

Using the variable cost per unit, we can calculate the flexible budget for 12,000 units of production as follows:

Variable costs = Variable cost per unit x Number of units produced 
Variable costs = $1.90 x 12,000 = $22,800

Fixed costs remain the same at $25,000.

Therefore, the flexible budget for 12,000 units of production would be:

Total costs = Variable costs + Fixed costs 
Total costs = $22,800 + $25,000 = $47,800

Thus, the correct choice is C.