5) Turner, Inc. budgeted 10,000 widgets for production during 2016. Turner has capacity to produce 15,000 units. The sale price of the widgets is $80 per unit. Fixed factory overhead is allocated using direct labour hours. The following estimated costs were provided: Direct material $ 80,000 Direct labour 600,000 50,000 20,000 Variable manufacturing overhead Fixed factory overhead costs Total $750,000 During the year 8,000 units were produced, and 7,000 units was sold. When preparing the static budget for the production department, which level of activity should the company use? A. 7,000 units B. 8,000 units C. 10,000 units D. 15,000 units
5) Turner, Inc. budgeted 10,000 widgets for production during 2016. Turner has capacity to produce 15,000 units. The sale price of the widgets is $80 per unit. Fixed factory overhead is allocated using direct labour hours. The following estimated costs were provided: Direct material $ 80,000 Direct labour 600,000 50,000 20,000 Variable manufacturing overhead Fixed factory overhead costs Total $750,000 During the year 8,000 units were produced, and 7,000 units was sold. When preparing the static budget for the production department, which level of activity should the company use? A. 7,000 units B. 8,000 units C. 10,000 units D. 15,000 units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Turner, Inc. budgeted 10,000 widgets for production during 2016. Turner has capacity to
produce 15,000 units. The sale price of the widgets is $80 per unit. Fixed factory overhead is
allocated using direct labour hours. The following estimated costs were provided:
Direct material
$ 80,000
Direct labour
600,000
50,000
20,000
Variable manufacturing overhead
Fixed factory overhead costs
Total
$750,000
During the year 8,000 units were produced, and 7,000 units was sold.
5)
When preparing the static budget for the production department, which level of activity
should the company use?
A. 7,000 units
B. 8,000 units
C. 10,000 units
D. 15,000 units
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