Homework SourseSamsung Corporation had a static budget at the beginning of
Samsung Corporation had a static budget at the beginning of the company\'s accounting period based on an expected volume of 5,000 units:
If actual production totals 6,000 units which is within the relevant range, the flexible budget would show fixed costs of:
A. $10,000.
B. $2 per unit.
C. $12,000.
D. None of these answers is correct.
| Per Unit | |||
| Revenue | $ | 5.00 | |
| Variable costs | 1.50 | ||
| Contribution margin | $ | 3.50 | |
| Fixed costs | 2.00 | ||
| Net income | $ | 1.50 | |
Solution
NOTE:Total fixed costs and variable cost per unit do not change with change in units.
Hence at 5000 units;Total fixed costs=(5000*$2)=$10000
Hence at 6000 units;fixed costs=$10000(A).
