Question

gHenderson Ski Co. prepared a master budget that included $21,360 for direct materials, $33,600 for direct labor, $18,000 for variable overhead, and $46,440 for fixed overhead. Henderson planned to sell 2,000 units during the period, but actually sold 3,400 units. What would Henderson’ total costs be if it used a flexible budget for the period based on actual sales?

Answer 1

Answer:

Total cost= $170,472

Explanation:

Giving the following information:

Direct material= $21,360

Direct labor= $33,600

Variable overhead= $18,000

FIxed overhead= $46,440

Henderson planned to sell 2,000 units during the period, but sold 3,400 units.

First, we need to calculate the unitary variable cost:

Unitary variable cost= total variable cost/number of units

Unitary variable cost= (72,960/2,000)= $36.48

Now, we can calculate the total cost for 3,400 units

Total cost= total fixed cost  + total variable cost

Total cost= 46,440 + (36.48*3,400)= $170,472