CIMA BA2 · Chapter 6 · Question 8 of 13
A department's budgeted costs are $84,000 at 10,000 units and $105,600 at 14,000 units. Actual output was 12,500 units. What is the flexed budget cost allowance for the actual output?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $97,500
Explanation
Variable cost per unit = ($105,600 - $84,000) / (14,000 - 10,000) = $5.40. Fixed cost = $84,000 - (10,000 x $5.40) = $30,000. Flexed budget = $30,000 + (12,500 x $5.40) = $97,500.