Scott Manufacturing Co.’s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $23,000. At 12,000 units of production, a flexible budget would show:
To find out the flexible budget at 12,000 units of production for Scott Manufacturing Co., we need to calculate the variable costs based on the given information.
Variable costs include direct labor and electric power. The variable cost per unit can be calculated by dividing the total cost by the number of units.
Variable cost per unit of direct labor = Total direct labor cost / Number of units
Variable cost per unit of direct labor = $40,000 / 10,000 = $4
Variable cost per unit of electric power = Total electric power cost / Number of units
Variable cost per unit of electric power = $4,000 / 10,000 = $0.4
Now that we have the variable costs per unit, we can calculate the total variable costs at 12,000 units of production.
Total variable costs = Variable cost per unit * Number of units
Total variable costs for direct labor at 12,000 units = $4 * 12,000 = $48,000
Total variable costs for electric power at 12,000 units = $0.4 * 12,000 = $4,800
Adding up the total variable costs, we get:
Total variable costs at 12,000 units = $48,000 + $4,800 = $52,800
To find the flexible budget at 12,000 units of production, we need to add the fixed costs to the total variable costs.
Fixed costs = $23,000
Flexible budget at 12,000 units = Fixed costs + Total variable costs
Flexible budget at 12,000 units = $23,000 + $52,800 = $75,800
Therefore, a flexible budget at 12,000 units of production for Scott Manufacturing Co. would be $75,800.