Flagstags flexible budget estimates are $74,000, $77,000, and $80,000 to manufacture 4,000, 4,500, and 5,000 gallons of

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Flagstags’ flexible budget estimates are $74,000, $77,000, and $80,000 to manufacture 4,000, 4,500, and 5,000 gallons of beer, respectively, next quarter.

What are the variable and fixed manufacturing costs in the flexible budget for Falstags Brewery?

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To identify the variable and fixed costs in the flexible budget we need to analyze the cost estimates for each level of production Variable costs are expenses that vary in proportion to the level of production In this case the variable cost is the cost of manufacturing each gallon of beer We can calculate the variable cost per gallon of beer by dividing the total variable cost by the number of gallons produced Variable Cost per gallon Flexible Budget Estimate Fixed Cost Estimate Number of Gallons Produced For the 4000gallon production level Variable Cost per gallon 74000 Fixed Cost Estimate 4000 For the 4500gallon production level Variable Cost per gallon 77000 Fixed Cost Estimate 4500 For the 5000gallon production level Variable Cost per gallon 80000 Fixed Cost Estimate 5000 On the other hand fixed costs are expenses that do not vary with changes in the level of production In this case the fixed cost includes the expenses for the equipment facilities and other overhead costs We can solve for the fixed cost by subtracting the variable cost per gallon from the total cost estimate ...View the full answer

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