Asked by Melissa Jordan on Jul 12, 2024
Verified
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
A) the same cost structure in total
B) direct materials of $72,000, direct labor of $52,800, fixed utilities of $5,000, and supervisor salaries of $25,000
C) total variable costs of $159,800
D) direct materials of $60,000, direct labor of $52,800, fixed utilities of $6,000, and supervisor salaries of $25,000
Static Budget
A budget that remains unchanged over the budget period and is not adjusted for actual levels of activity.
Flexible Budget
A budget that adjusts or varies with changes in the volume of activity, production levels, or other operational factors.
Direct Materials
Raw materials that can be directly traced to the production of goods or services and are considered variable costs.
- Compute variable and fixed expenses within the context of flexible budgeting.
Verified Answer
Learning Objectives
- Compute variable and fixed expenses within the context of flexible budgeting.
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