Problem:
Flexible Budget with Different Levels of Production
Bowling Company budgeted the following amounts:
| Variable costs of production: |
|
|
Direct materials |
10 pounds @ $0.60 per pound |
|
Direct labor |
0.6 hr. @ $16.5 per hour |
|
VOH: |
0.7 hr. @ $2.60 |
| FOH: |
|
|
Materials handling |
$6,900 |
|
Depreciation |
$2,100 |
Required:
Question: Prepare a flexible budget for 2,500 units, 3,000 units, and 3,500 units.
Note: Please provide reasons to support your answer.