Miller and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $24,000. A flexible budget for 12,000 units of production would show the

a) same cost structure in total

b) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $29,000

c) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000

d) total variable costs of $148,000

correct option is c) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000

Explanation:

given data

static budget = 10,000 units

direct materials = $50,000

direct labor = $44,000

variable utilities = $5,000

supervisor salaries = $24,000

flexible budget = 12,000 units

solution

Miller & Sons Static Budget Flexible Budget

Details Total Cost Variable cost/unit total cost

unit produced 10000 12000

direct material 50000 500 60000

direct labour 44000 4.40 52800

variable utility 5000 0.50 6000

supervisor salary 24000 24000

total cost 123000 142800

so correct option is c) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000