Based on predicted production of 24,200 units, a company anticipates $220,000 of fixed costs and $435,600 of variable costs. If the company actually produces 18,900 units, what are the flexible budget amounts of fixed and variable costs?

Variable cost = $340,200

Fixed cost = $220,000

Explanation:

Given that,

At Predicted production = 24,200 units,

Fixed costs = $220,000

Variable costs = $435,600

Per unit variable cost:

= Variable costs ÷ No. of units produced

= $435,600 ÷ 24,200

= $18 per unit

Total cost at 24,200 units,

= Variable costs + Fixed cost

= $435,600 + $220,000

= $655,600

Total cost at 18,900 units,

= Variable costs + Fixed cost

= ($18 × 18,900) + $220,000

= $340,200 + $220,000

= $560,200

Note: Fixed cost does not changes with the change in the output level.

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1. c

2. b

3. a

4. c

5. a

6. b

7. c

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10. d

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