Question

Using the provided budgeted information for production of 10,000 and 15,000 units, prepare a flexible budget for 17,000 units.

Production 10,000 units 15,000 units 17,000 units

Expense A $15,000 $22,500 ?

Expense B $21,000 $21,000 ?

Expense C $43,000 $43,000 ?

Answer 1

In the solution Expense B and Expense C are fixed expenses and Expense A is Variable Expense i.e it change with change in Units produced .
As units produced increased Expense A increased but Expense B and C remain same