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MOCKTOE INC. Flexible Budget Cost Formula (per toaster) Activity (toasters) 110000 120000 130000 Variable costs: Total...

MOCKTOE INC.
Flexible Budget
Cost Formula (per toaster) Activity (toasters)
110000 120000 130000
Variable costs:
Total variable costs $0.00 $0 $0 $0
Fixed costs:
Total fixed costs $0 $0 $0
Total costs $0 $0 $0

ToasToe Inc. (TI) is a manufacturer of heating elements for toaster overs. To improve control over operations, the president wants to install a flexible budgeting system, rather than the single master budget being used at present. The following data are available for expected costs for production. The relevant range of production levels for fixed overhrad costs is 80,000 to 180,000 units:

  

  
  Variable costs:
     Manufacturing $ 8.50/unit
     Administrative $ 5.50/unit
     Selling $ 3.50/unit
  Fixed costs:
     Manufacturing $ 170,000
     Administrative $ 105,000

  

Required:

Prepare a flexible budget for each of the three possible sales levels: 110,000, 120,000, and 130,000 units. Each toaster oven is expected to sell for $20.00.

Solutions

Expert Solution

Flexible budget is based on actual level of activity however the standard rate used is as budgeted while preparing static budget

ekkarill92 answered 2 years ago
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