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Question - Huckleberries Chocolatiers is located in Sudbury, Ontario and well known for its classic and customized chocolates and chocolate products. The latest product of the company is the hot chocolate bombs filled with hot chocolate and marshmallows. The operations team decided to implement the flexible budgeting system. Based on the generated data and expected new trends, the team determined the following variable costs: direct materials $2.75 per unit, direct labour $4.20 per unit and manufacturing overhead $0.60 per unit. The fixed costs consist of deprecation $23,500 and administrative $17,850.
Required -
(a) Prepare a flexible budget assuming the following possible production levels: 9,500, 12,000, and 14,500 units.
(b) Explain the difference between ideal standards and normal standards is.
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