A factory produces 50,000 units for the month of June,although its budgeted output was 40,000 units.In this case:
A)A comparison of budgeted results and actual results will be misleading unless the company uses a flexible budget.
B)Actual fixed costs per unit may be expected to exceed budgeted levels.
C)Actual cost per unit will be higher than standard cost per unit.
D)Both total production costs and unit production costs should be approximately 25% above budgeted levels.

Question

Quizplus · Accepted Answer

Since the factory produced more units than what was originally budgeted, comparing the actual results to the budgeted results without adjusting the budget for the increased productivity will result in misleading information. Therefore, a flexible budget that adjusts for changes in output levels is necessary.

A Factory Produces 50,000 Units for the Month of June,although