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Question 6 Foxtrot Manufacturing prepared budgets for two levels of activity were as follows: Capacity 50% 100% Budget Production (m3) 500 1000 Wages $1,000 $2,000

Question 6

Foxtrot Manufacturing prepared budgets for two levels of activity were as follows:

Capacity

50%

100%

Budget Production (m3)

500

1000

Wages

$1,000

$2,000

Consumables

$750

$1,500

Maintenance

$1,000

$1,500

Power & Fuel

$1,500

$2,000

Engineering

$4,000

$4,000

Insurance

$1,000

$1,000

$9,250

$12,000

You are required to:

(a) Indicate which of the items are fixed, variable and semi-variable.

(b) Prepare a budget for 75% capacity; and

(c) Find the total cost, both fixed and variable, per units of output at 60%, 80% and 100% capacity.

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