Dealer Enterprises (DE) anticipated that 100,000 process hours would be worked during an upcoming accounting period when, in fact, 108,000 hours were actually worked. One of the company's cost functions is expressed as follows: Y = $18PH + $800,000 where PH is defined as process hours What budgeted dollar amount would appear in DE's static budget and flexible budget for the preceding cost function?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Dealer Enterprises (DE) anticipated that 100,000 process hours would be worked during an upcoming accounting period when, in fact, 108,000 hours were actually worked. One of the company's cost functions is expressed as follows: Y = $18PH + $800,000 where PH is defined as process hours What budgeted dollar amount would appear in DE's static budget and flexible budget for the preceding cost function?
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Step 1: Introduce to flexible budget and planning budget

Flexible budget is calculated by multiplying variable amount per unit of activity by actual activity level. Static budget is calculated by multiplying variable amount per unit of activity by planned activity level. 

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