### Static Budget OverviewRay's cost accountant prepared the following static budget based on expected activity of 2,000 units for the current accounting period:- **Sales Revenue:** $32,000- **Variable Costs:** $(12,000)- **Contribution Margin:** $20,000- **Fixed Costs:** $(8,000)- **Net Income:** $12,000### Flexible Budget AnalysisIf Ray actually produced 1,800 units, the flexible budget would show fixed costs amounting to:#### Multiple Choice- $15,000- $8,000- $6,000- **$9,000** (Option Selected)**Explanation:** In a flexible budget, fixed costs generally remain constant regardless of the number of units produced. Therefore, the fixed costs would remain at $8,000. However, any change indicated here might reflect an adjustment or specific context in the problem not apparent from the given information.

Lets understand the basics.Costs are mainly divided into two types which are,(1) Variable cost (2)…

Ray's cost accountant prepared the following static budget based on expected activity of 2,000 units for the current accounting period $ 32,000 (12,000) Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Income Multiple Choice If Ray actually produced 1,800 units, the flexible budget would show fixed costs amounting to $15,000 $8,000 20,000 (8,000) $6,000 $ 12,000

Ray's cost accountant prepared the following static budget based on expected activity of 2,000 units for the current accounting period $ 32,000 (12,000) Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Income Multiple Choice If Ray actually produced 1,800 units, the flexible budget would show fixed costs amounting to $15,000 $8,000 20,000 (8,000) $6,000 $ 12,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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