Exercise 22-7 (Part Level Submission) (a) APPLIANCE POSSIBLE INC. Flexible Produ
ID: 2399959 • Letter: E
Question
Exercise 22-7 (Part Level Submission)
(a)
APPLIANCE POSSIBLE INC.
Flexible Production Cost Budget
Open Show Work
SHOW ANSWER
LINK TO TEXT
(b)
Exercise 22-7 (Part Level Submission)
Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for AP’s expected costs at production levels of 80,000, 91,000, and 102,000 units.Variable costs Manufacturing $7 per unit Administrative $3 per unit Selling $2 per unit Fixed costs Manufacturing $130,000 Administrative $76,000
Explanation / Answer
Answers
Production Levels
80000
91000
102000
Variable costs:
Manufacturing
$ 560,000.00
$ 637,000.00
$ 714,000.00
Administrative Selling
$ 240,000.00
$ 273,000.00
$ 306,000.00
Selling
$ 160,000.00
$ 182,000.00
$ 204,000.00
Total Variable cost
$ 960,000.00
$ 1,092,000.00
$ 1,224,000.00
Fixed Costs:
Manufacturing
$ 130,000.00
$ 130,000.00
$ 130,000.00
Administrative
$ 76,000.00
$ 76,000.00
$ 76,000.00
Total Fixed Costs
$ 206,000.00
$ 206,000.00
$ 206,000.00
Total Costs
$ 1,166,000.00
$ 1,298,000.00
$ 1,430,000.00
---Working for above:
Production Levels
80000
91000
102000
Variable costs:
Manufacturing
=80000*7
=91000*7
=102000*7
Administrative Selling
=80000*3
=91000*3
=102000*3
Selling
=80000*2
=91000*2
=102000*2
Total Variable cost
Total Variable cost
Total Variable cost
Total Variable cost
Fixed Costs:
Manufacturing
130000
130000
130000
Administrative
76000
76000
76000
Total Fixed Costs
Total Fixed Costs
Total Fixed Costs
Total Fixed Costs
Total Costs
Total Costs
Total Costs
Total Costs
A
Sale price per over
$ 17.00
B = 7 + 3 + 2
Variable cost per over
$ 12.00
C = A - B
Unit Contribution margin
$ 5.00
D
Total fixed cost
$ 206,000.00
E
Required profit
$ 368,000.00
F = D+E
Total contribution margin required
$ 574,000.00
G = F/C
No. of units to be sold to earn profits of $368,000
114,800
Production Levels
80000
91000
102000
Variable costs:
Manufacturing
$ 560,000.00
$ 637,000.00
$ 714,000.00
Administrative Selling
$ 240,000.00
$ 273,000.00
$ 306,000.00
Selling
$ 160,000.00
$ 182,000.00
$ 204,000.00
Total Variable cost
$ 960,000.00
$ 1,092,000.00
$ 1,224,000.00
Fixed Costs:
Manufacturing
$ 130,000.00
$ 130,000.00
$ 130,000.00
Administrative
$ 76,000.00
$ 76,000.00
$ 76,000.00
Total Fixed Costs
$ 206,000.00
$ 206,000.00
$ 206,000.00
Total Costs
$ 1,166,000.00
$ 1,298,000.00
$ 1,430,000.00
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.