gHenderson Ski Co. prepared a master budget that included $21,360 for direct materials, $33,600 for direct labor, $18,000 for variable overhead, and $46,440 for fixed overhead. Henderson planned to sell 2,000 units during the period, but actually sold 3,400 units. What would Henderson' total costs be if it used a flexible budget for the period based on actual sales?

Question

Business

Seth Horn

12 November, 19:39

gHenderson Ski Co. prepared a master budget that included $21,360 for direct materials, $33,600 for direct labor, $18,000 for variable overhead, and $46,440 for fixed overhead. Henderson planned to sell 2,000 units during the period, but actually sold 3,400 units. What would Henderson' total costs be if it used a flexible budget for the period based on actual sales?

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Frankfurter · Answer 1

Total cost = $170,472

Explanation:

Giving the following information:

Direct material = $21,360

Direct labor = $33,600

Variable overhead = $18,000

FIxed overhead = $46,440

Henderson planned to sell 2,000 units during the period, but sold 3,400 units.

First, we need to calculate the unitary variable cost:

Unitary variable cost = total variable cost/number of units

Unitary variable cost = (72,960/2,000) = $36.48

Now, we can calculate the total cost for 3,400 units

Total cost = total fixed cost + total variable cost

Total cost = 46,440 + (36.48*3,400) = $170,472