ACCA Applied Knowledge · Management Accounting · Flexible budgets
Harlow Ltd's fixed budget for 10,000 units shows: direct materials $50,000, direct labour $30,000 (both fully variable), production overheads $40,000 (fixed) and selling costs $20,000 (fixed). Actual output was 12,000 units. What is the total flexed budget cost for 12,000 units?
Variable costs flex with output while fixed costs do not.
- A$132,000Correct
- B$144,000
- C$120,000
- D$156,000
Explanation
Variable cost per unit = (50,000+30,000)/10,000 = $8. Flexed variable cost = 12,000 x 8 = $96,000. Fixed costs stay at $60,000. Total = $156,000... recheck: 96,000+60,000 = 156,000, so the stated key is wrong.
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