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Managerial Accounting

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Operational Budgeting for Blenders

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Dawkins Corp's master budget was based on a level of activity of producing and selling 100,000 blenders with a retail price of \$50 per unit. The company has the capacity to produce 125,000 units. Variable labor costs were budgeted to be \$1,250,000. Variable material costs were budgeted to be \$775,000 and variable overhead costs were budgeted to be \$1,300,000. Actual labor costs incurred were \$1,407,550 on 110,000 units produced and sold.

What should the flexible budget labor cost be under the new activity level?

A

$1,250,000

B

$1,375,000

C

$1,125,000

D

$1,407,000