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Managerial Accounting (Flexible budgeting) Healthcare Inc.(HCI) uses flexible budgeting system, rather than only the current master...

Managerial Accounting (Flexible budgeting)

Healthcare Inc.(HCI) uses flexible budgeting system, rather than only the current master budget. The following data are available for HCI's expected costs at production levels of 100,000,110,000 and 120,000 units:

Variable costs:

Manufacturing $8 per unit

Administrative $4 per unit

Selling $3 per unit

Fixed costs:

Manufacturing $350,000

Administrative $150,000

a) Prepare a flexible budget for each of the possible production levels:100,000, 110,000 and 120,000 units.

b) If HCI sells its product for $35 each, how many units will it have to sell to make a profit of $500,000 after taxes? The company tax rate is 20%.

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Answer #1

Health Care Inc (HCI) flexible overhead cost budget production units 100000 110000 120000 variable costs manufacturing (8 perselling price total variable cost per unit 35 15 contribution margin per unit 20 pre tax profit 500000/80% 625000 b) units ne

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