Exercise 10-7 (Part Level Submission) (Video)

Appliance Possible Inc. (AP) is a manufacturer of toaster ovens. To improve control over operations, the president of AP wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for APs expected costs at production levels of 81,000, 92,000, and 103,000 units.

Variable costs
Manufacturing		$6 per unit
Administrative		$3 per unit
Selling		$2 per unit
Fixed costs
Manufacturing		$130,000
Administrative		$82,000

(a)

Prepare a flexible budget for each of the possible production levels: 81,000, 92,000, and 103,000 units. (List variable costs before fixed costs.)

APPLIANCE POSSIBLE INC. Flexible Production Cost Budget
Activity LevelTotal Variable CostsTotal CostsSellingTotal Fixed CostsVariable CostsAdministrativeFixed CostsManufacturingProduction Levels
Total Fixed Costs Administrative Total Costs Activity Level Selling Manufacturing Fixed Costs Production Levels Total Variable Costs Variable Costs
Total CostsSellingTotal Fixed CostsTotal Variable CostsVariable CostsActivity LevelAdministrativeFixed CostsManufacturingProduction Levels
Total Fixed Costs Total Variable Costs Selling Administrative Variable Costs Fixed Costs Production Levels Manufacturing Activity Level Total Costs		$		$		$
Activity Level Production Levels Total Fixed Costs Total Variable Costs Administrative Fixed Costs Manufacturing Selling Total Costs Variable Costs
Manufacturing Variable Costs Selling Total Fixed Costs Total Variable Costs Activity Level Administrative Fixed Costs Production Levels Total Costs
SellingTotal CostsVariable CostsActivity LevelFixed CostsManufacturingTotal Fixed CostsProduction LevelsAdministrativeTotal Variable Costs
Variable CostsFixed CostsTotal CostsSellingActivity LevelManufacturingTotal Fixed CostsAdministrativeProduction LevelsTotal Variable Costs
Variable Costs Manufacturing Production Levels Administrative Selling Total Costs Activity Level Total Fixed Costs Total Variable Costs Fixed Costs
Fixed Costs Variable Costs Administrative Activity Level Total Costs Manufacturing Selling Production Levels Total Fixed Costs Total Variable Costs
Production LevelsManufacturingFixed CostsSellingTotal CostsTotal Fixed CostsVariable CostsActivity LevelTotal Variable CostsAdministrative
Variable CostsTotal Variable CostsAdministrativeFixed CostsManufacturingProduction LevelsTotal CostsSellingTotal Fixed CostsActivity Level		$		$		$