Part A : Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To imp
ID: 2558449 • Letter: P
Question
Part A : 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 90,000, 100,000, and 110,000 units. Variable costs Manufacturing $6 per unit Administrative $4 per unit Selling $3 per unit Fixed costs Manufacturing $160,000 Administrative $80,000 Prepare a flexible budget for each of the possible production levels: 90,000, 100,000, and 110,000 units
Part B : If AP sells the toaster ovens for $16 each, how many units will it have to sell to make a profit of $60,000 before taxes? Units to be sold ____
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars 90,000 Units 100,000 Units 110,000 Units Variable costs: Manufacturing costs 540,000.00 600,000.00 660,000.00 Administrative costs 360,000.00 400,000.00 440,000.00 Selling costs 270,000.00 300,000.00 330,000.00 Total variable costs 1,170,000.00 1,300,000.00 1,430,000.00 Fixed costs: Manufacturing costs 160,000.00 160,000.00 160,000.00 Administrative costs 80,000.00 80,000.00 80,000.00 Fixed costs 240,000.00 240,000.00 240,000.00 Total costs 1,410,000.00 1,540,000.00 1,670,000.00 Part B Selling price per unit 16.00 Manufacturing costs per unit 6.00 Administrative costs per unit 4.00 Selling cost per unit 3.00 Contribution per unit= 16 - 6 -4 -3 3.00 Fixed costs 240,000.00 Profit before tax 60,000.00 Contribution desired 300,000.00 No of units to be sold = 300,000/3 100,000.00
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