As a result of studying past cost behavior and adjusting for expected price increases in the future,

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As a result of studying past cost behavior and adjusting for expected price increases in the future, Nicholson Company estimates that its manufacturing costs will be as follows:

Direct Materials.................................................................................. $10.00 per Unit
Direct Labor...........................................................................................$6.00 per Unit
Manufacturing Overhead:
Variable ................................................................................................ $3.00 per Unit
Fixed............................................................................................ $100,000 per Period

Nicholson uses these estimates for planning and control purposes.
a. Nicholson expects to produce 20,000 units during the next period. Prepare a schedule of the expected manufacturing costs.
b. Suppose that Nicholson produces only 16,000 units during the next period. Prepare a flexible budget of manufacturing costs for the 16,000-unit level of activity.
c. Suppose that Nicholson produces 25,000 units during the next period. Prepare a flexible budget of manufacturing costs for the 25,000-unit level of activity.

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Related Book For  answer-question

Managerial Accounting An Introduction to Concepts Methods and Uses

ISBN: 978-0324639766

10th Edition

Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil

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