Microgen Company static budget for 12,000 units of production includes $48,000 f
ID: 2575156 • Letter: M
Question
Microgen Company static budget for 12,000 units of production includes $48,000 for direct materials, $36,000 for direct labor, utilities of $6,000, and supervisor salaries of $18,000. A flexible budget for 14,000 units of production would show Oa. total variable costs of $126,800. Ob. the same cost structure in total. O c. direct materials of $50,000, direct labor of $37,500, utilities of $6,250, and supervisor salaries of $21,000. Od. direct materials of $56,000, direct labor of $42,000, ubilities of $7,000, and supervisor salaries of $18,000.Explanation / Answer
Answer -d. Variable Costs Direct Materials - $48,000 X 14,000/12,000 56,000 Direct Labor - $36,000 X 14,000 / 12,000 42,000 Utilities - $6,000 X 14,000 / 12,000 7,000 Total Variable Costs 105,000 Fixed Cost: Suprevisor Salary 18,000 Total Costs 123,000