Answer:
The flexible budget would show fixed costs of $16,000
Explanation:
Meaning of Fixed cost: The fixed cost is that cost which is not have any impact on production level. It means that if the production level is increase or decrease, the fixed cost remain constant.
In the question the following information is given ,
Expected volume - 8,000 units
Per unit Revenue - $ 4.00
Variable costs [per unit - 1.50
Contribution margin per unit - $ 2.50
Fixed costs per unit - 2.00
Net income per unit - $ 0.50
Actual production - 10,000 units
For computing the fixed cost under flexible budget for actual production which produces 10,000 units. The fixed cost remain same.
So, For 8000 units, the fixed cost = Units × Fixed cost per unit
= 8000 units × 2.00
=$16,000
Hence, For 10,000 units, the fixed cost would be $16,000 as fixed cost remain same.
Thus, the flexible budget would show fixed costs of $16,000
