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If a company has a static budget of $100,000 for 10,000 units and actual product

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Question: If a company has a static budget of $100,000 for 10,000 units and actual production is 12,000 units, what is the flexible budget amount for actual production?

Options:

  1. $120,000
  2. $100,000
  3. $80,000
  4. $150,000

Correct Answer: $120,000

Solution: 

The flexible budget is calculated by adjusting the static budget based on actual production. Therefore, $100,000 / 10,000 units = $10 per unit; for 12,000 units, it is $10 * 12,000 = $120,000.

If a company has a static budget of $100,000 for 10,000 units and actual product

Practice Questions

Q1
If a company has a static budget of $100,000 for 10,000 units and actual production is 12,000 units, what is the flexible budget amount for actual production?
  1. $120,000
  2. $100,000
  3. $80,000
  4. $150,000

Questions & Step-by-Step Solutions

If a company has a static budget of $100,000 for 10,000 units and actual production is 12,000 units, what is the flexible budget amount for actual production?
  • Step 1: Identify the static budget amount, which is $100,000.
  • Step 2: Identify the number of units in the static budget, which is 10,000 units.
  • Step 3: Calculate the cost per unit by dividing the static budget by the number of units: $100,000 / 10,000 units = $10 per unit.
  • Step 4: Identify the actual production amount, which is 12,000 units.
  • Step 5: Calculate the flexible budget amount for actual production by multiplying the cost per unit by the actual production: $10 per unit * 12,000 units = $120,000.
  • Static Budget vs. Flexible Budget – Understanding the difference between a static budget, which remains unchanged regardless of actual production levels, and a flexible budget, which adjusts based on actual output.
  • Budgeting Calculations – Calculating per-unit costs and adjusting total budget amounts based on changes in production levels.
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