Exercise 22-7 (Part Level Submission) Appliance Possible Inc. (AP) is a manufact
ID: 2514340 • Letter: E
Question
Exercise 22-7 (Part Level Submission) 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 90,000, 105,000, and 120,000 units Variable costs Manufacturing Administrative Selling $6 per unit $4 per unit $1 per unit Fixed costs $143,000 $71,000 Manufacturing AdministrativeExplanation / Answer
Answer
Units [Level of activity]
90000
105000
120000
Variable costs:
Manufacturing [$6 x Units]
$ 5,40,000.00
$ 6,30,000.00
$ 7,20,000.00
Administrative [$4 x Units]
$ 3,60,000.00
$ 4,20,000.00
$ 4,80,000.00
Selling [$1 x Units]
$ 90,000.00
$ 1,05,000.00
$ 1,20,000.00
Total Variable Cost
$ 9,90,000.00
$ 11,55,000.00
$ 13,20,000.00
Fixed Costs:
Manufacturing
$ 1,43,000.00
$ 1,43,000.00
$ 1,43,000.00
Administrative
$ 71,000.00
$ 71,000.00
$ 71,000.00
Total Fixed Cost
$ 2,14,000.00
$ 2,14,000.00
$ 2,14,000.00
Total Cost
$ 12,04,000.00
$ 13,69,000.00
$ 15,34,000.00
Units [Level of activity]
90000
105000
120000
Variable costs:
Manufacturing [$6 x Units]
$ 5,40,000.00
$ 6,30,000.00
$ 7,20,000.00
Administrative [$4 x Units]
$ 3,60,000.00
$ 4,20,000.00
$ 4,80,000.00
Selling [$1 x Units]
$ 90,000.00
$ 1,05,000.00
$ 1,20,000.00
Total Variable Cost
$ 9,90,000.00
$ 11,55,000.00
$ 13,20,000.00
Fixed Costs:
Manufacturing
$ 1,43,000.00
$ 1,43,000.00
$ 1,43,000.00
Administrative
$ 71,000.00
$ 71,000.00
$ 71,000.00
Total Fixed Cost
$ 2,14,000.00
$ 2,14,000.00
$ 2,14,000.00
Total Cost
$ 12,04,000.00
$ 13,69,000.00
$ 15,34,000.00
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