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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Heat Fast Inc. (HFI) is a manufacturer of heating elements for toaster ovens. To improve control over operations, the president wants to
Install a flexible budgeting system, rather than the single master budget being used at present. The following data are available for
expected costs for production. The relevant range of production levels for fixed overhead costs is 80,000 to 180,000 units:
Variable costs:
Manufacturing
Administrative
Selling
Fixed costs:
Manufacturing
Administrative
Variable costs:
Manufacturing
Administrative
Selling
Required:
Prepare a flexible budget for each of the three sales levels: 116,000, 126,000 and 136,000 units. Each toaster oven is expected to sell
for $22.40.
Total variable costs
Fixed costs
Manufacturing
Administrative
$9.60/unit
$5.25/unit
$4.25/unit
Total fixed costs
Total costs
Income from operations
$ 194,900
$ 112,500
Heat Fast Inc.
Flexible Budget
Cost Formula
(per toaster)
$
0.00 $
$
$
116,000
Activity (toasters)
126,000
0 $
0 $
0 $
0 $
0 $
0
$
136,000
0.
0
0
چار
4

Transcribed Image Text:Heat Fast Inc. (HFI) is a manu
install a flexible budgeting sy
expected costs for productio
Variable costs:
Manufacturing
Administrative
Selling
Fixed costs:
Manufacturing
Administrative
Variable costs:
Manufacturing
Administrative
Selling
Total variable costs
Required:
Prepare a flexible budget for each of the three sales levels: 116,000, 126,000 and 136,000 units. Each toaster oven is expected to sell
for $22.40
Fixed costs
Manufacturing
Administrative
of heating elements for toaster ovens. To improve control over operations, the president wants to
ather than the single master budget being used at present. The following data are available for
relevant range of production levels for fixed overhead costs is 80,000 to 180.000 units
Total fixed costs
Total costs
Income from operations
init
unit
unit
$
194,900
$ 112,500
Heat Fast Inc.
Flexible Budget
Cost Formula
(per toaster)
$
0.00 $
$
$
116,000
Activity (toasters)
0 $
0 $
0 $
126,000
0 $
0 $
0
$
136,000
0
0
0
Expert Solution
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