Exercise 22 Part Level Submission Appliance Possible Inc AP

Exercise 22- (Part Level Submission) Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for AP\'s expected costs at production levels of 80,000, 90,000, and 100,000 units. Variable costs Manufacturing Administrative Selling $6 per unit $3 per unit $1 per unit Fixed costs Manufacturing Administrative $130,000 $70,000 Prepare a flexible budget for each of the possible production levels: 80,000, 90,000, and 100,000 units. (List variable costs before fixed costs.) APPLIANCE POSSIBLE INC. Flexible Production Cost Budget

Solution

Particulars

80000 units

90000 units

100000 units

Variable cost

Variable manufacturing cost ($6 p.u)

480000

540000

600000

Variable administrative cost ($3 p.u)

240000

270000

300000

Variable selling cost ($1 pu)

80000

90000

100000

Fixed cost

Fixed manufacturing cost

130000

130000

130000

Fixed administrative cost

70000

70000

70000

Total

10,00,000

11,00,000

12,00,000

Particulars		80000 units	90000 units	100000 units
Variable cost
Variable manufacturing cost ($6 p.u)		480000	540000	600000
Variable administrative cost ($3 p.u)		240000	270000	300000
Variable selling cost ($1 pu)		80000	90000	100000
Fixed cost
Fixed manufacturing cost		130000	130000	130000
Fixed administrative cost		70000	70000	70000
Total		10,00,000	11,00,000	12,00,000