Concept explainers
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
Variable costs | |
Manufacturing | $6 per unit |
Administrative | $4 per unit |
Selling | $3 per unit |
Fixed costs | |
Manufacturing | $160,000 |
Administrative | $80,000 |
Instructions
(a) Prepare a flexible budget for each of the possible production levels: 90,000, 100,000, and 110,000 units.
(b) If AP sells the toaster ovens for $16 each, how many units will it have to sell to make a profit of $60,000 before taxes?
(CGA adapted)
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