Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

Data-2-Go manufactures and sells flash drives. The company produces only when it

ID: 2483368 • Letter: D

Question

Data-2-Go manufactures and sells flash drives. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:

Prepare a flexible budget for Data-2-Go. (Do not round intermediate calculations.)

Data-2-Go manufactures and sells flash drives. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:

Actual
(based on actual of
750,000 units) Master Budget
(based on budgeted
800,000 units)   Sales revenue $ 3,105,000 $ 3,000,000   Less          Variable costs        Blank flash drives 900,000 900,000        Direct labor 172,500 210,000        Variable overhead 421,500 390,000        Variable marketing and administrative 292,500 300,000        Total variable costs $ 1,786,500 $ 1,800,000   Contribution margin $ 1,318,500 $ 1,200,000   Less      Fixed costs        Manufacturing overhead 618,000 600,000        Marketing 180,000 180,000        Administrative 127,500 112,500        Total fixed costs $ 925,500 $ 892,500   Operating profits $ 393,000 $ 307,500 Required:

Prepare a flexible budget for Data-2-Go. (Do not round intermediate calculations.)

Explanation / Answer

Calculation of variable cost per unit and sales revenue per unit based on master budget Particulars Total ($) Number of units Cost/unit ($) Sales revenue 3000000 800000 3.75 Variable costs: Blank flash drives 900000 800000 1.125 Blank flash drives 210000 800000 0.2625 Variable overhead 390000 800000 0.4875 Variable marketing and administrative 300000 800000 0.375 Flexible budget (750000 units) Particulars $ $ Sales @3.75 per unit 2812500 Variable cost: Blank flash drives @1.125 per unit 843750 Blank flash drives @ 0.2625 per unit 196875 Variable overhead @0.4875 per unit 365625 Variable marketing and administrative @ $0.375 per unit 281250 Total variable cost 1687500 Total contribution 1125000 Less: Fixed costs Manufacturing overhead 600000 Marketing 180000 Administrative 112500 Total Fixed costs 892500 Operating Profit 232500