Question

Ionic Co. has the following budgeted product costs for each month of the last quarter of 2020. The budgeted costs were based on an expected monthly volume of 1,500 units. The budgeted per unit costs are:

Direct materials: $1.50

Direct labour: $2.25

Variable overhead: $4.25

Fixed overhead: $3.00

Total per unit costs: $11.00

In December, Ionic expects to produce 2,000 units. The total budgeted costs for December should be:

Question 10 options:

	$22,000
	$16,000
	$20,500
	$16,500

Answer 1

Correct answer------------$20,500

Working

Direct materials (2000*1.5)	$            3,000
Direct labour (2000*2.25)	$            4,500
Variable overhead (2000*4.25)	$            8,500
Fixed overhead (1500 x 3)	$            4,500
Total budgeted cost	$          20,500