Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve cont

Question

Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for AP's expected costs at production levels of 80,000, 90,000, and 100,000 units. a costs Manufacturing Administrative Selling $6 per unit $3 per unit $1 per unit Fixed costs Manufacturing Administrative $130,000 $70,000 ? (a) Prepare a flexible budget for each of the possible production levels: 80,000, 90,000, and 100,000 units. (List variable costs before fixed costs.) APPLIANCE POSSIBLE INC. Flexible Production Cost Budget Activity Level Productlon Levels 80000 90000 100000 a Costs Manufacturin Administrative Sellin Total Variable Costs Total Costs Manufacturin Administrative Total Fixed Costs Total Costs LINK TO TEXT

Explanation / Answer

Flexible cost budget :

Activity level Production levels 80000 90000 100000 Variable cost Manufacturing 480000 540000 600000 Administrative 240000 270000 300000 Selling 80000 90000 100000 Total variable cost 800000 900000 1000000 Fixed cost Manufacturing 130000 130000 130000 Administrative 70000 70000 70000 Total fixed cost 200000 200000 200000 Total fixed 1000000 1100000 1200000

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