Flat Company currently produces cardboard boxes in an automated process.Expected production per month is 40,000 units.The required direct materials cost $0.30 per unit.Manufacturing fixed overhead costs are $24,000 per month.The cost driver for manufacturing fixed overhead costs is units of production.In a static budget at 40,000 units,the total fixed cost is ________ per month and the total variable cost is ________ per month.
A)$24,000; $6,000
B)$24,000; $12,000
C)$12,000; $6,000
D)$12,000; $12,000

Question

Quizplus · Accepted Answer

The fixed manufacturing overhead cost is given as $24,000 per month, which is constant regardless of the level of production, hence it remains the same at 40,000 units. 
Variable cost per unit is direct materials cost per unit which is $0.30. Therefore, total variable cost at 40,000 units is 40,000 x $0.30 = $12,000. 
Thus, the total fixed cost is $24,000 per month and the total variable cost is $12,000 per month, giving a total budget of $36,000 at 40,000 units of production.

Flat Company Currently Produces Cardboard Boxes in an Automated Process