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Question
Whidbey Co. fixed budget for the year is shown below:| Sales (50,000 units) "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. | $1,300,000 | |
| Cost of goods sold: | ||
| Direct materials "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 | $150,000 | |
| Direct labor "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6... | 450,000 | |
| Overhead (includes $2 per unit variable overhead) "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. |
240,000 | 840,000 |
| Gross profit "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6... | $ 460,000 | |
| Selling expenses: | ||
| Sales commissions (all variable) "u00a6"u00a6"u00a6.. | 60,000 | |
| Rent (all fixed) "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. | 40,000 | |
| Insurance (all fixed) "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. | 35,000 | |
| General and administrative expenses: | ||
| Salaries (all fixed) "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 | 72,000 | |
| Rent (all fixed) "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. | 54,000 | |
| Depreciation (all fixed) "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6. | 31,000 | 292,000 |
| Net income from operations "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 | $ 168,000 |
Prepare a flexible budget for Whidbey Co. that shows a detailed budget for its actual sales volume of 42,000 units. Use the contribution margin format.
Answer
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