Question

Fisher Steel produces steel plates for manufacturing and construction. They generally use a static budget with the following costs based on 50,000 units per month: Indirect materials, $105,000; indirect labor, $98,000; utilities, $14,000; supervision, $5,000; depreciation, $22,000. If Fisher wanted to create a flexible budget for 60,000 units, what value would they record for fixed costs?

A : $49,200
B : $32,400
C : $27,000
D : $41,000

Answer 1

C : $27,000

Step-by-step explanation:

Mainly there are two types of cost i.e variable cost and the fixed cost. The variable cost is that cost which is change when the production level change whereas the fixed cost is that cost which remains constant whether production level changes or not

So, the variable cost includes indirect material, indirect labor, and utilities

And, the fixed cost includes supervision and depreciation expense.

Now the fixed cost would be

= Supervision + depreciation expense

= $22,000 + $5,000

= $27,000