The Beach Company currently produces sandals in an automated process. Expected production per month is 20,000 units. The required direct materials cost is $1.50 per unit. Manufacturing fixed overhead costs are $30,000 per month. Manufacturing overhead is allocated based on units of production. is the flexible budget for 15,000 and 20,000 units, respectively.
A) $52,500 and $60,000
B) $88,000 and $76,000
C) $45,000 and $60,000
D) $22,500 and $30,000

Question

Quizplus · Accepted Answer

Direct materials cost is variable and is $1.50 per unit. Manufacturing overhead is fixed at $30,000 per month. Therefore, the flexible budget for 15,000 units is $52,500 (15,000 units x $1.50 + $30,000) and for 20,000 units is $60,000 (20,000 units x $1.50 + $30,000).

The Beach Company Currently Produces Sandals in an Automated Process