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Required: a. What is the budgeted fixed cost per period? b. What is the budgeted variable cost per unit? c. What is the value of F(that is, the flexible budget for an activity level of 8,000 units)? d. What is the flexible budget cost amount if the actual activity had been 16,000 units?

Required: a. What is the budgeted fixed cost per period? b. What is the budgeted variable cost per unit? c. What is the value of F(that is, the flexible budget for an activity level of 8,000 units)? d. What is the flexible budget cost amount if the actual activity had been 16,000 units?

FINANCIAL ACCOUNTING
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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### Graph Explanation: Costs vs. Activity per Month This graph represents the relationship between costs and activity per month, specifically focusing on the concepts of master budget, flexible budget, and actual costs. #### Elements of the Graph: - **Vertical Axis (Y-axis):** Represents costs in dollars. It is marked at $40,000, $80,000, and $120,000. - **Horizontal Axis (X-axis):** Represents the activity per month, measured in units. It shows two specific points: 8,000 units (Actual activity) and 10,000 units (Planned activity). - **Flexible Budget Line:** This line extends diagonally across the graph, indicating the flexible budget adjustment in response to actual activity levels. - **Master Budget Point:** This is the point on the flexible budget line at 10,000 units, showing the planned activity and corresponding budgeted costs. - **Actual Costs Point:** This point is located on the flexible budget line at 8,000 units, indicating the cost incurred at the actual activity level. - **F Line:** This is a horizontal line at the cost level corresponding with the actual activity, illustrating the variance between the flexible budget and actual costs at 8,000 units. #### Analysis: The graph helps compare costs at different levels of activity: - The flexible budget line adjusts budgets for actual activity levels, enabling more precise financial planning. - The difference between the master budget and actual costs indicates budget performance, highlighting areas for financial analysis and management. This type of analysis is crucial in budgeting to identify variances and improve financial planning in an organization.
Transcribed Image Text:### Graph Explanation: Costs vs. Activity per Month This graph represents the relationship between costs and activity per month, specifically focusing on the concepts of master budget, flexible budget, and actual costs. #### Elements of the Graph: - **Vertical Axis (Y-axis):** Represents costs in dollars. It is marked at $40,000, $80,000, and $120,000. - **Horizontal Axis (X-axis):** Represents the activity per month, measured in units. It shows two specific points: 8,000 units (Actual activity) and 10,000 units (Planned activity). - **Flexible Budget Line:** This line extends diagonally across the graph, indicating the flexible budget adjustment in response to actual activity levels. - **Master Budget Point:** This is the point on the flexible budget line at 10,000 units, showing the planned activity and corresponding budgeted costs. - **Actual Costs Point:** This point is located on the flexible budget line at 8,000 units, indicating the cost incurred at the actual activity level. - **F Line:** This is a horizontal line at the cost level corresponding with the actual activity, illustrating the variance between the flexible budget and actual costs at 8,000 units. #### Analysis: The graph helps compare costs at different levels of activity: - The flexible budget line adjusts budgets for actual activity levels, enabling more precise financial planning. - The difference between the master budget and actual costs indicates budget performance, highlighting areas for financial analysis and management. This type of analysis is crucial in budgeting to identify variances and improve financial planning in an organization.
**Required:** a. What is the budgeted fixed cost per period? b. What is the budgeted variable cost per unit? c. What is the value of \( F \) (that is, the flexible budget for an activity level of 8,000 units)? d. What is the flexible budget cost amount if the actual activity had been 16,000 units? **Table:** | | Description | Amount | |--- |---------------------------|--------------| | a. | Budgeted fixed cost | | | b. | Budgeted variable cost | per unit | | c. | Value of \( F \) | | | d. | Flexible budget cost | |
Transcribed Image Text:**Required:** a. What is the budgeted fixed cost per period? b. What is the budgeted variable cost per unit? c. What is the value of \( F \) (that is, the flexible budget for an activity level of 8,000 units)? d. What is the flexible budget cost amount if the actual activity had been 16,000 units? **Table:** | | Description | Amount | |--- |---------------------------|--------------| | a. | Budgeted fixed cost | | | b. | Budgeted variable cost | per unit | | c. | Value of \( F \) | | | d. | Flexible budget cost | |
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