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Question
Jake Co. has prepared the following fixed budget for the year, assuming production and sales of 30,000 units. This level of production represents 80% of capacity.| Jake Co. Fixed Budget For Year Ending December 31 | ||
| Sales "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. | $1,500,000 | |
| Cost of goods sold: | ||
| Direct materials "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 | $540,000 | |
| Direct labor "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. | 300,000 | |
| Indirect materials (variable) "u00a6.... | 15,000 | |
| Indirect labor (variable) "u00a6"u00a6"u00a6... | 21,000 | |
| Depreciation "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. | 180,000 | |
| Salaries "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. | 90,000 | |
| Utilities (80% fixed) "u00a6"u00a6"u00a6"u00a6"u00a6. | 54,000 | |
| Maintenance (40% variable) "u00a6"u00a6 | 33,000 | 1,233,000 |
| Gross profit "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6... | $ 267,000 | |
| Operating expenses: | ||
| Commissions "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 | $ 45,000 | |
| Advertising (fixed) "u00a6"u00a6"u00a6"u00a6"u00a6... | 60,000 | |
| Wages (variable) "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. | 15,000 | |
| Rent "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. | 30,000 | |
| Total operating expenses "u00a6"u00a6"u00a6. | 150,000 | |
| Income from operations "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6... | $ 117,000 | |
Calculate the following flexible budget amounts at the indicated levels of capacity:
| Operations at 60% of Capacity | Operations at 75% of Capacity | ||
| Sales | |||
| Total variable costs | |||
| Total fixed costs | |||
| Income from operations |
Answer
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