Question

Chelsa manufacturing co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. total fixed costs are $23,000. at 8,000 units of production, a flexible budget would show

a. variable and fixed costs totaling $107,000

b. variable costs of $64,000, and $28,000 of fixed costs

c. variable costs of $64,000, and $23,000 of fixed costs

d. variable costs of $72,000, and $23,000 of fixed costs

Answer 1

Calculate variable cost per unit

40000/5000=8 per unit

And
5000/5000=1 per unit

Variable cost per unit=8+1=9 per unit

So variable cost at 8000 units is
8,000×9=72,000

Your answer is
d. variable costs of $72,000, and $23,000 of fixed costs