15. Use the following performance report for a cost center of the Dry December 3

Question

15. Use the following performance report for a cost center of the Dry December 31 to answer the question below. Cat Food Division for the month ended Actual Results Flexible Master Varian Budged Varian Budget 30 (U) Units produced Center costs Direct materials $1001 Direct labor 60 (F Variable overhead 20(U210 Fixed Total cost Performance measures Defect-free units to total N/ A N/A 90% produced 2 minutes NIANA 10 minu Average throughput ime per unit The flexible budget is based on how many units produced? a. 0 units b. 30 units c. 70 units d. 100 units

Explanation / Answer

Solution:

A flexible budget is a budget that adjusts or flexes for changes in the volume of activity. The flexible budget is more sophisticated and useful than a static budget, which remains at one amount regardless of the volume of activity.

Therefore flexible budget is prepared on the basis of standard cost for actual output.

Therefore in the given question master budget was perpared on the basis of 100 unit production but actual proudction is only 70 units therefore flexible budget will be based on 70 units produced.

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