Johansson Company developed the following static budget at the beginning of the company's accounting period: $$\begin{array} { l r }
\text { Revenue } ( 8,000 \text { units } ) & \$ 16,000 \
\text { Variable costs } & \underline { 4,000 } \
\text { Contribution margin } & \$ 12,000 \
\text { Fixed costs } & \underline { 4,000 } \
\text { Net income } & \$ 8,000
\end{array}$$ If the actual volume of sales was 8,200 units, the flexible budget would show variable costs of
A) $16,400.
B) $4,000.
C) $4,100.
D) $4,800.

Question

Johansson Company developed the following static budget at the beginning of the company's accounting period: $$\begin{array} { l r } 
\text { Revenue } ( 8,000 \text { units } ) & \$ 16,000 \
\text { Variable costs } & \underline { 4,000 } \
\text { Contribution margin } & \$ 12,000 \
\text { Fixed costs } & \underline { 4,000 } \
\text { Net income } & \$ 8,000
\end{array}$$ If the actual volume of sales was 8,200 units, the flexible budget would show variable costs of
A) $16,400.
B) $4,000.
C) $4,100.
D) $4,800.

Quizplus · Accepted Answer

The variable cost per unit is $4,000 / 8,000 units = $0.50 per unit. For 8,200 units, the variable costs would be 8,200 * $0.50 = $4,100.

Johansson Company Developed the Following Static Budget at the Beginning