Question
Patisserie Cezannes director of cost management has determined that electricity is a variable cost incurred at a rate of $0.50 per hour of process time.
Patisserie Cezannes director of cost management has determined that electricity is a variable cost incurred at a rate of $0.50 per hour of process time. The predicted level of activity for September is 7,500 hours of process time. This estimate is based on planned production of P2,500 multilayer fancy cakes, where each cake require three hours of total process time. Patisserie produced 2,000 multilayer fancy cakes during September and used 6,000 hours of process time and incurred electricity cost of $3,200.
What is the applicable budget method? Static or flexible budget? Why?
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