A company's flexible budget for 12,000 units of production showed sales,$48,000; variable costs,$18,000; and fixed costs,$16,000.The sales expected if the company produces and sells 16,000 units is:

Question

Quizplus · Accepted Answer

To find out the sales expected if the company produces and sells 16,000 units, we need to use the concept of the flexible budget. 
First, we need to calculate the total variable cost per unit:
Variable cost per unit = Total variable cost / Units of production
Variable cost per unit = $18,000 / 12,000 units
Variable cost per unit = $1.50
Next, we need to use this variable cost per unit to calculate the total variable cost for 16,000 units of production:
Total variable cost = Variable cost per unit x Units of production
Total variable cost = $1.50 x 16,000 units
Total variable cost = $24,000
Now, we can use the flexible budget formula to calculate the expected sales for 16,000 units of production:
Flexible budget formula = Fixed costs + Variable cost per unit x Units of production
Flexible budget = $16,000 + ($1.50 x 16,000)
Flexible budget = $16,000 + $24,000
Flexible budget = $40,000
Therefore, the sales expected if the company produces and sells 16,000 units is $40,000. The correct answer is B.

A Company's Flexible Budget for 12,000 Units of Production Showed