Question

Miller and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $24,000. A flexible budget for 12,000 units of production would show the
a) same cost structure in total
b) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $29,000
c) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000
d) total variable costs of $148,000

Answer 1

Answer:

correct option is c) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000

Explanation:

given data

static budget = 10,000 units

direct materials = $50,000

direct labor = $44,000

variable utilities = $5,000

supervisor salaries = $24,000

flexible budget = 12,000 units

solution

Miller & Sons                     Static Budget                          Flexible Budget

Details                              Total Cost  Variable cost/unit      total cost

unit produced                   10000                                             12000

direct material                   50000          500                           60000

direct labour                      44000          4.40                           52800

variable utility                    5000            0.50                           6000

supervisor salary               24000                                            24000

total cost                           123000                                           142800

so correct option is c) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000