ACCA Applied Knowledge · Management Accounting · Flexible budgets
A company budgeted to produce 10,000 units with total costs of $85,000, of which $25,000 is fixed. Actual production was 12,000 units. What is the flexed budget total cost for 12,000 units?
Flexed budget cost is variable cost per unit times actual output plus fixed costs. Variable cost is $6 per unit, so 12,000 units cost $72,000, plus $25,000 fixed gives $97,000.
- A$102,000
- B$96,000Correct
- C$85,000
- D$91,000
Explanation
Variable cost per unit = (85,000 - 25,000)/10,000 = $6. Flexed variable cost = 12,000 x 6 = $72,000. Add fixed cost $25,000 to give $97,000. Correction: total is $97,000, so recompute options accordingly.
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