Wind productions uses flexible budgets. items from the budget for march in which 3,000 units were produced and sold appear below: direct materials$18,000 indirect materials - variable2,000 supervisor salaries15,000 depreciation on factory equipment4,000 direct labor10,000 property taxes on factory1,000
if wind prepares a flexible budget at 4,000 units, compute its total variable cost.
total variable cost$

$40,000

Explanation:

For computing the total variable cost, first we have to determine the variable cost per unit which is shown below:

= (Direct materials cost + Indirect materials - variable + Direct labor cost) ÷ (number of units produced and sold)

= ($18,000 + $2,000 + $10,000) ÷ (3,000 units)

= ($30,000) ÷ (3,000 units)

= $10 per unit

Now the total variable cost would be

= $4,000 units × $10 per unit

= $40,000

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