kitchen care inc kci is a manufacturer of toaster ovens 273268

Kitchen Care Inc. (KCI) is a manufacturer of toaster ovens. To improve control over operations, the president of KCI wants to begin using a flexible budgeting system, rather than use only the current master budget. The following data are available for KCI’s expected costs at production levels of 90,000, 100,000, and 110,000 units.

Variable costs

Manufacturing ……… $6 per unit

Administrative ……… $3 per unit

Selling ……………… $1 per unit

Fixed costs

Manufacturing ……….. $150,000

Administrative ……….. $ 80,000

Instructions

(a) Prepare a flexible budget for each of the possible production levels: 90,000, 100,000, and 110,000 units.

(b) If KCI sells the toaster ovens for $15 each, how many units will it have to sell to make a profit of $250,000 before taxes?

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