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Jase 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 $24,000. At 12,000 units of production, a flexible budget would show a.variable costs of $44,000 and $24,000 of fixed costs b.variable costs of $52,800 and $29,000 of fixed costs c.variable costs of $52,800 and $24,000 of fixed costs d.variable and fixed costs totaling $68,000

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Answer:

The correct answer is C.

Explanation:

Giving the following information:

10,000 units:

$40,000 for direct labor

$4,000 for electric power

Total fixed costs are $24,000.

I will assume that the 12,000 units are between the relevant range (fixed costs remains constant).

We need to calculate the unitary variable costs:

Unitary variable cost= total cost/number of units

Unitary variable cost= 44,000/10,000= $4.4

Now for 12,000 units:

Total variable costs= 4.4*12,000= $52,800

Total fixed costs= $24,000

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