ACCA Applied Knowledge · Management Accounting · Flexible budgets
A company budgets for 4,000 units: variable production cost $10 per unit, a step-fixed supervision cost of $9,000 per 5,000 units of output or part thereof, and other fixed costs of $20,000. Activity is flexed to 6,200 units. What is the total flexed budget cost?
The total flexed cost is $100,000. Variable costs are $62,000, supervision needs two steps of $9,000 because output exceeds 5,000 units, giving $18,000, and other fixed costs are $20,000.
- A$99,000Correct
- B$91,000
- C$90,000
- D$100,000
Explanation
Variable cost = 6,200 x 10 = $62,000. Supervision: 6,200 units needs two steps = $18,000. Other fixed = $20,000. Total = $100,000. Check: 62,000+18,000+20,000 = $100,000, so the key is $100,000 and not the options with one step.
Did you get it right without looking?
One question tells you little. A timed set on Flexible budgets shows your real accuracy, how long you take and where you lose marks.
More Flexible budgets questions
- Budgeted sales were 5,000 units at $20 each with variable cost $12 per unit and fixed costs $18,000. Actual sales were 5,600 units at $19 ea…
- A department's budget was 2,000 labour hours costing $24,000, with 40% of the cost fixed. Actual hours were 2,500 and actual cost was $28,10…
- Which statement about reporting variances using a flexed budget is correct?
- A company budgeted 8,000 units with a semi-variable cost of $46,000. At 12,000 units the semi-variable cost is expected to be $62,000. What …
- 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 …
- A budget is flexed from 5,000 to 6,000 units. Which statement about the flexed budget is correct?