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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 25000-unit level of activity.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9957361

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