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1 February, 17:15

Waterway Industriesbudgeted manufacturing costs for 70000 tons of steel are: Fixed manufacturing costs $50000 per month Variable manufacturing costs $12 per ton of steel Waterwayproduced 55000 tons of steel during March. How much is the flexible budget for total manufacturing costs for March?

A. $890000

B. $695000

C. $660000

D. $710000

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Answers (1)
  1. 1 February, 17:41
    0
    Option (D) is correct.

    Explanation:

    Flexible budget for 55,000 tons:

    Total Manufacturing costs for 55,000 tons:

    = Fixed manufacturing costs + Variable manufacturing costs

    = Fixed manufacturing costs + (Tons of steel produced during march * Variable manufacturing costs per ton of steel)

    = $50,000 + (55,000 tons of steel * $12 per ton)

    = $50,000 + $660,000

    = $710,000

    Note:

    Period costs constant irrespective of tons produced.
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