In a Period When Anticipated Production Is 20,000 Units, Budgeted

question 137

Multiple Choice

In a period when anticipated production is 20,000 units, budgeted variable costs are $85,000 and budgeted fixed costs are $45,000.If 15,000 units are actually produced, what is the expected total cost?

• A)$130,000
• B)$97,500
• C)$108,750
• D)$118,750

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Definitions:

Purchases Discounts

Purchases discounts are reductions in price given by suppliers to buyers for early payment of invoices.

Credit Memo

A document issued by a seller to a buyer, reducing the amount that the buyer owes to the seller typically due to a return or an error in billing.

Recognition of Cost

The accounting principle that requires expenses to be recorded in the period in which they are incurred, regardless of when the payment is made.

Merchandise Sold

Merchandise sold refers to the goods that have been purchased by customers from a company, resulting in revenue.