budgeting

Dear john, I hope you are Healthy and happy. I had a confusion about preparing flexed budget. Let me write the data:- Fixed budget : sales - 10,000 production - 13,000 materials - 50,000 , labour - 25,000 , variable O/H - 12,500 , Fixed O/H - 10,000 Actual results : sales 12,000 , Production - 15,000 materials - 60,000 , labour - 28,500 , Var. O/H - 15,000 ,Fixed O/H - 10,000 Its the same example from the notes/lecture but i had doubt that when we calculate flexed budget , do we divide the variable costs by Sales or production to calculate cost per unit which is later used to calculate flexed budget. A) Like for Material - 50,000/10,000(sales) = $ 5 p.u and when calculating flexed budget , I would simply multiply this cost with actual sales which is 12,000 i.e 5*12000 = $ 60,000 B) Material - 50,000/13,000(production) = $ 3.85 p.u and flexed budget material cost will be - 3.85 * 16,000 ( production ) = $ 61,600 So You see, I am not sure whether we divide total variable cost by original budget sales or production and then multiply it with actual sales or production. In original example, in notes/lectures both sales and production were same, so i didn't knew which we were dividing with.