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A firm uses flexible budgets. The budget for overheads is $45000 based upon production of 9000 units. Overheads are a semi-variable cost and 60% of the budgeted overheads are fixed. In a periods 8,100units were produced.
Correct answer is $43,200
My working was
45000/9000=$5
$5 x 8100= $40,500
Sir where am i lacking? If i use 60% the answer isnt in the option
I have watched your lecturesIf 60% of the overheads are fixed, then the fixed overheads are 60% x 45,000 = $27,000 and will, by definition, stay at $27,000 whatever the level of activity.
The variable overheads are therefore (45,000 – 27,000) / 9,000 = $2 per unit.
A firm uses flexible budgets. The budget for overheads is $45000 based upon production of 9000 units. Overheads are a semi-variable cost and 60% of the budgeted overheads are fixed. In a periods 8,100units were produced.
What was overhead flexible budget for the periods?
Correct answer is $43,200
Sir sorry i didnt wrote the correct question. How is it 43,200?You did write the correct question, and my answer was more than enough for you to arrive at $43,200.
I have told you what the variable cost per unit is ($2).
I have also told you what the total fixed cost is ($27,000).Surely with that information you can calculate what the total cost is for production of 8,100 units !!
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