Question

Marigold Corp.budgeted manufacturing costs for 70000 tons of steel are: Fixed manufacturing costs $50000 per month Variable manufacturing costs $12 per ton of steel Marigoldproduced 40000 tons of steel during March. How much is the flexible budget for total manufacturing costs for March

Answer 1

Answer:

Explanation:

Computation of the flexible budget for total manufacturing costs for March:

Flexible budget for total manufacturing costs for March = (Production of steel during March × Variable Manufacturing Costs per ton of steel) + Fixed Manufacturing Costs Per month.

Flexible budget for total manufacturing costs for March = ( 40,000 ton × $12 per ton ) + $50,000

Flexible budget for total manufacturing costs for March = $480,000 + $50,000

Flexible budget for total manufacturing costs for March = $530,000

Answer is $530,000

Answer 2

Answer: $290,000

Explanation:

Flexible budget for 20,000 tons:

Fixed manufacturing costs (Period costs constant irrespective of tons produced) $50,000

Variable manufacturing costs

($12 × 20,000) $240,000

Total Manufacturing costs for 20,000 tons will be:

$50,000 + $240000 = $290,000

Note: Variable costs varies based on the number of units produced whereas Fixed costs are the period costs that are constant irrespective of units produced.