Question 176799: Can someone please help me with this:
Johansson Company developed the following static budget at the beginning of the company's accounting period:
Revenue(8,000 units) = $16,000
Variable Costs = 4,000
Contribution margin = $12,000
Fixed costs = 4,000
Net income = $8,000
If actual production totals 8,400 units, the flexible budget would show variable costs of:
a. $16,400
b. $4,000
c. $4,100
d. $4,200
Answer by Mathtut(3670)   (Show Source):
You can put this solution on YOUR website! Revenue(8,000 units) = $16,000
Variable Costs = 4,000
Contribution margin = $12,000
Fixed costs = 4,000
Net income = $8,000
If actual production totals 8,400 units, the flexible budget would show variable costs of:
a. $16,400
b. $4,000
c. $4,100
d. $4,200
:
the revenue per unit is $2(16000/8000)
:
the variable costs are 25% of revenue
:
so since the revenue from 400 more units is 800(400(2))
:
then the extra variable costs is 25% of 800 or $200
:
so total Variable costs should be $4200...CHOICE D
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