Laurie Inc.’s static budget for 10,000 units of production includes $60,000 for direct materials, $44,000 for direct labor, fixed utilities costs of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production would show

Question

BlackTom AI · Accepted Answer

Direct materials and direct labor are variable costs and change proportionally with output; fixed utilities and supervisor salaries do not change with production within the relevant range.

1. Relevant knowledge points and concepts
- Variable costs vary in total with production volume but are constant per unit (direct materials, direct labor).
- Fixed costs remain constant in total regardless of production volume (fixed utilities, supervisor salaries).
- Flexible budget adjusts variable costs by the ratio of actual units to budgeted units.

2. Step-by-step reasoning
- Determine per-unit variable costs from the static budget at 10,000 units.
- Scale those per-unit amounts to the new activity level (12,000 units = 1.2 × 10,000).
- Leave fixed costs unchanged in total for the flexible budget.

3. Calculations (showing intermediate steps)
- Direct materials per unit = $60,000 / 10,000 units = $6.00 per unit.
- Direct materials at 12,000 units = $6.00 × 12,000 = $72,000.
- Direct labor per unit = $44,000 / 10,000 units = $4.40 per unit.
- Direct labor at 12,000 units = $4.40 × 12,000 = $52,800.
- Fixed utilities remain = $5,000 (no change).
- Supervisor salaries remain = $25,000 (no change).
- (Optional total) Total flexible budget cost = $72,000 + $52,800 + $5,000 + $25,000 = $154,800.

4. Why the correct answer is correct
- The choice "direct materials of $72,000, direct labor of $52,800, fixed utilities costs of $5,000, and supervisor salaries of $25,000" exactly applies the variable cost scaling (×1.2) and leaves fixed costs unchanged; this follows standard flexible budget practice.

5. Why the other options are incorrect
- "The same cost structure in total" is incorrect because variable costs must increase when output increases; total costs do not remain the same.
- "Direct materials of $60,000, direct labor of $52,800, fixed utilities costs of $6,000, and supervisor salaries of $25,000" is wrong because direct materials should increase to $72,000 (not remain $60,000), and fixed utilities are fixed at $5,000 (not $6,000).
- "Total variable costs of $159,800" is incorrect numerically: total variable costs at 12,000 units are $72,000 + $52,800 = $124,800, not $159,800.

6. Conclusion
The flexible budget for 12,000 units is: direct materials $72,000; direct labor $52,800; fixed utilities $5,000; supervisor salaries $25,000 — matching the provided correct answer.

Laurie Inc.’s static budget for 10,000 units of production includes $60,000 for direct materials, $44,000 for direct labor, fixed utilities costs of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production would show 单项选择题

类似问题

Which budget evaluates the results of operations at the actual level of activity?

Flexing the budget means

Variable cost per unit and total fixed costs remain constant in the relevant range. Therefore, total fixed costs should not change with the change in activity level and you would take the variable cost per unit times the new activity level to generate the flexible budget line item.

When the activity level of the master/planning/static budget differs from the activity level (cost driver, allocation base; e.g., machine hours), then a flexible budget is needed to match the same activity level that the actuals are based on to truly analyze revenue and spending variances.

Which of the following is TRUE of flexible budget?

The flexible budget for direct materials is computed in which of the following ways?

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