exercise 21-3 (algo) preparing flexible budgets lo p1

tempo companys fixed budget (based on sales of 12,000 units) follows.

fixed budget
sales (12,000 units x $207 per unit): 2,484,000
costs
direct materials: 276,000
direct labor: 528,000
indirect materials: 336,000
supervisor salary: 76,000
sales commissions: 96,000
shipping: 180,000
administrative salaries: 126,000
building rent: 96,000
insurance: 66,000
office rent: 76,000
income: 628,000

required 1 | required 2 | required 3

compute total variable cost per unit.

total variable cost per unit:

Question

exercise 21-3 (algo) preparing flexible budgets lo p1

tempo companys fixed budget (based on sales of 12,000 units) follows.

fixed budget
sales (12,000 units x $207 per unit): 2,484,000
costs
direct materials: 276,000
direct labor: 528,000
indirect materials: 336,000
supervisor salary: 76,000
sales commissions: 96,000
shipping: 180,000
administrative salaries: 126,000
building rent: 96,000
insurance: 66,000
office rent: 76,000
income: 628,000

required 1 | required 2 | required 3

compute total variable cost per unit.

total variable cost per unit:

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "blank_filling_formatter", "explain_then_answer", "quick" ], "needs_drawing": false, "concepts_used": [ "Variable Cost Behavior" ], "new_concepts": [], "current_concepts": [ "Variable Cost Behavior", "Flexible Budgeting" ] } ## Identify variable costs and their total amount $$ \begin{aligned} &\text{Direct materials} = \$276,000 \ &\text{Direct labor} = \$528,000 \ &\text{Indirect materials} = \$336,000 \ &\text{Sales commissions} = \$96,000 \ &\text{Shipping} = \$180,000 \ &\text{Total Variable Costs} = 276,000 + 528,000 + 336,000 + 96,000 + 180,000 = \$1,416,000 \end{aligned} $$ ## Calculate total variable cost per unit $$ \begin{aligned} &\text{Budgeted Sales Units} = 12,000 \ &\text{Total variable cost per unit} = \frac{\$1,416,000}{12,000\text{ units}} = \$118\text{ per unit} \end{aligned} $$ Compute total variable cost per unit. | Total variable cost per unit | \$118 | { "subject": "Business", "question_type": "Fill-in-the-blank", "knowledge_point": [ "Business", "Accounting", "Flexible Budgeting" ] }

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Explanation:

Identify variable costs and their total amount

Calculate total variable cost per unit

Answer: