Question

In: Accounting

Sundin Inc. ("The Company") is a manufacturer of hockey sticks in Sweden. This year is a...

Sundin Inc. ("The Company") is a manufacturer of hockey sticks in Sweden. This year is a very important year for the company, as they are considering going public in the near future. Management wants to do some scenario planning and see what the financial results would look like under different production levels.

The Company has budgeted these costs for one hockey stick (1 Unit).

Materials	1 stick of wood @ $50.00
Labour	1.25 hours of direct labour @ $9.00/hour
Variable overhead	1.25 hours of direct labour @ $10.00/hour

Fixed overhead for The Company will be $14,000 this year

Required: Prepare a flexible budget, for the year, for the production of 3,500 and 4,000 units. Using this flexible budget, answer the following questions:

Question 26 options:

What is the total cost to The Company, excluding fixed overhead, for the production of 3,500 units?

Question 27 options:

What is the total cost per unit for the production of 3,500 units?

Question 28 options:

What is the total cost to The Company, excluding fixed overhead, for the production of 4,000 units?

Question 29 options:

What is the total cost per unit for the production of 4,000 units?

Question 30 options:

Which of the following is true regarding a flexible budget?

	A flexible budget can only be created at the start of the year
	Flexible budget is another name for the static budget
	A flexible budget can only be created for one production level
	A flexible budget can be created for multiple production levels

Question 31 options:

Using the flexible budget, what costs are included in calculating the total cost of production?

	Direct materials, direct labour
	Direct materials, direct labour, variable manufacturing overhead
	Direct materials
	Direct materials, direct labour, variable manufacturing overhead, fixed manufacturing overhead

Expert Solution

ekkarill92 answered 2 years ago

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