[The following information applies to the questions displayed below.]
Skelton Corporation had planned to produce 50,000 units of product during the first quarter of the current year.The company prepared the following budget on May 1:
During the first quarter,Skelton produced 60,000 units and incurred total manufacturing costs of $184,000.
-Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level?
A)Direct materials used,$43,200
B)Direct labor,$54,000
C)Variable overhead,$27,000
D)Fixed manufacturing overhead,$70,200

Question

[The following information applies to the questions displayed below.]
Skelton Corporation had planned to produce 50,000 units of product during the first quarter of the current year.The company prepared the following budget on May 1:
  During the first quarter,Skelton produced 60,000 units and incurred total manufacturing costs of $184,000.
-Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level?
A)Direct materials used,$43,200 
B)Direct labor,$54,000 
C)Variable overhead,$27,000 
D)Fixed manufacturing overhead,$70,200

Quizplus · Accepted Answer

Fixed manufacturing overhead costs should not be included in Skelton's flexible budget as they do not change with changes in production volume. The flexible budget should only include variable costs that change with changes in production volume, such as direct materials used, direct labor, and variable overhead costs.

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