Answer the following questions using the information below:
The actual information pertains to the month of September. As part of the budgeting process, Kriger Fencing Company developed the following static budget for September. Kriger is in the process of preparing the flexible budget and understanding the results.

-The flexible budget will report ________ for variable costs.
A)$256,000
B)$300,000
C)$240,000
D)$320,000

Question

Answer the following questions using the information below:
The actual information pertains to the month of September. As part of the budgeting process, Kriger Fencing Company developed the following static budget for September. Kriger is in the process of preparing the flexible budget and understanding the results.
    
-The flexible budget will report ________ for variable costs.
A)$256,000 
B)$300,000 
C)$240,000 
D)$320,000

Quizplus · Accepted Answer

Since the question does not provide any information on how much the actual variable cost is, we use the formula: Flexible Budget = Fixed Budget + (Variable Cost per unit * Actual activity level) to find out the answer. From the static budget, we know that the total cost for the expected level of activity is $240,000. Therefore, the flexible budget would also report $240,000 for variable costs, because the flexible budget would reflect the same variable cost per unit as the static budget.

Answer the Following Questions Using the Information Below