Round 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 flexible budget at 20,000 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 manufacturing fixed overhead cost is $24,000 per month, regardless of the number of units produced. Therefore, in a flexible budget at 20,000 units, the total fixed cost is still $24,000. 
The variable cost is calculated by multiplying the number of units by the cost per unit. At 20,000 units, the variable cost is:
20,000 x $0.30 = $6,000 
Therefore, the total cost for 20,000 units in a flexible budget is:
$24,000 (fixed) + $6,000 (variable) = $30,000

Round Company Currently Produces Cardboard Boxes in an Automated Process