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What happens to unit cost as the number of units produced


Flexible Budget for Various Levels of Production

Budgeted amounts for the year:

Materials

2 leather strips @ $7.00

Labor

1.5 hr. @ $18.00

VOH

1.5 hr. @ $1.20

FOH

$6,800

Required:

  • 1.Prepare a flexible budget for 3,500, 4,000, and 4,500 units.
  • 2.CONCEPTUAL CONNECTION Calculate the unit cost at 3,500, 4,000, and 4,500 units. (Note: Round unit costs to the nearest cent.) What happens to unit cost as the number of units produced increases?

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Accounting Basics: What happens to unit cost as the number of units produced
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