Wind Productions uses flexible budgets. Items from the budget for March in which

Question

Wind Productions uses flexible budgets. Items from the budget for March in which 3,000 units were produced and sold appear below:

Direct materials
$18,000
Indirect materials - variable
2,000
Supervisor salaries
15,000
Depreciation on factory equipment
4,000
Direct labor
10,000
Property taxes on factory
1,000
Wind Productions uses flexible budgets. Items from the budget for March in which 3,000 units were produced and sold appear below: If Wind prepares a flexible budget at 4,000 units, compute its total variable cost.

Explanation / Answer

Hi,

Pease find the answer as follows:

Total Variable Cost Per Unit = (18000 + 2000 + 10000)/3000 = 10

Total Variable Cost for 4000 Units = 4000*10 = 40000

Answer is 40000.

Thanks.

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