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5 September, 09:52

Coleman Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $6,000 for electric power (which is considered variable and not mixed). Total fixed costs are $20,000. At 12,000 units of production, a flexible budget would showa. variable and fixed costs totaling $120,400.

b. variable costs of $66,000 and $20,000 of fixed costs.

c. variable costs of $92,400 and $20,000 of fixed costs.

d. variable costs of $92,400 and $28,000 of fixed costs.

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  1. 5 September, 10:11
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    Let's first compute the total amount of fixed and variable costs at 10,000 units

    first compute the variable cost per unit.

    variable cost per unit = total variable costs / total units

    = 40,000 + 6,000 / 10,000

    = 46,000 / 10,000

    = 4.6 per unit

    therefore the variable cost per unit is $4.60

    Now for the fixed cost at 12,000 units

    Variable costs = $55,200

    12,000 units x 4,60 per unit

    Fixed costs = 20,000

    Therefore the variable costs are 55,200 and the fixed costs are 20,000
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