Evanson Company expects to produce 512,000 units of their product during the year. Monthly production is expected to range from 40,000 to 80,000 units. The company has budgeted manufacturing costs per unit to be as follows: Direct materials $ 7 Direct labor 8 Variable manufacturing overhead 9 Fixed manufacturing overhead 3 Prepare a flexible manufacturing budget using 20,000 unit increments.

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Business

Jude Hahn

31 August, 18:11

Evanson Company expects to produce 512,000 units of their product during the year. Monthly production is expected to range from 40,000 to 80,000 units. The company has budgeted manufacturing costs per unit to be as follows: Direct materials $ 7 Direct labor 8 Variable manufacturing overhead 9 Fixed manufacturing overhead 3 Prepare a flexible manufacturing budget using 20,000 unit increments.

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Myles Leach · Answer 1

Total Cost using 20,000 increments is as follows:

40,000 units - $1,080,000 (Total Cost)

60,000 units - $1,620,000 (Total Cost)

80,000 units - $2,160,000 (Total Cost)

Explanation:

Monthly Flexible Manufacturing Budgets

Units Produced 40,000 60,000 80,000

Direct Material (7/unit) 280,000 420,000 560,000

Direct Labor (8/unit) 320,000 480,000 640,000

Variable Overhead (9/unit) 360,000 540,000 720,000

Total Variable Cost 960,000 1,440,000 1,920,000

Fixed Overhead (3/unit) 120,000 180,000 240,000

Total Cost $1,080,000 $1,620,000 $2,160,000