2. Prepare flexible budgets for the company at sales volumes of 18,000 and 24,00

Question

2. Prepare flexible budgets for the company at sales volumes of 18,000 and 24,000 units. (Round your variable amount per unit answers to 2 decimal places. Input all amounts as positive values. Omit the "$" sign in your response.) PEBCO COMPANY Flexible Budgets For Year Ended December 31, 2011 Flexible Budget Variable Amount per Unit Total Fixed Cost Flexible Budget for Unit Sales of 18,000 Flexible Budget for Unit Sales of 24,000 (Click to select) Variable costs (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) Total variable costs (Click to select) Fixed costs (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) Total fixed costs Income from operations

Explanation / Answer

1) Variable Number of units 20000 Sales 150 Cost of goods sold    Direct Material 60    Direct labor 13    Machinery repairs 2.85     Utilities 2.5     Packaging 4      Shipping 5.8 Total variable cost 88.15 Fixed     Depriciation-plant equipment 250000     Utlities 150000      Plant management salaries 140000      Sales salary 160000      Advertising 81000      Salaries 241000      Entertainment expense 90000 Total Fixed cost 1112000 2) Variable amount Total Units sales Units sales per unit fixed cost 18000 24000 Sales 150 2700000 3600000 Cost of goods sold    Direct Material 60 1080000 1440000    Direct labor 13 234000 312000    Machinery repairs 2.85 51300 68400     Utilities 2.5 45000 60000     Packaging 4 72000 96000      Shipping 5.8 104400 139200 Total variable cost 88.15 1586700 2115600     Depriciation-plant equipment 250000 250000 250000     Utlities 150000 150000 150000      Plant management salaries 140000 140000 140000      Sales salary 160000 160000 160000      Advertising 81000 81000 81000      Salaries 241000 241000 241000      Entertainment expense 90000 90000 90000 total fixed cost 1112000 1112000 1112000 Income from operations 1300 372400 3) Variable amount Total Units sales per unit fixed cost 28000 Sales 150 4200000 Cost of goods sold    Direct Material 60 1680000    Direct labor 13 364000    Machinery repairs 2.85 79800     Utilities 2.5 70000     Packaging 4 112000      Shipping 5.8 162400 Total variable cost 88.15 1586700     Depriciation-plant equipment 250000 250000     Utlities 150000 150000      Plant management salaries 140000 140000      Sales salary 160000 160000      Advertising 81000 81000      Salaries 241000 241000      Entertainment expense 90000 90000 total fixed cost 1112000 1112000 Income from operations 1501300 the operating income would increase by ( 1501300 - 125000) 1376300 4) Variable amount Total Units sales per unit fixed cost 14000 Sales 150 2100000 Cost of goods sold    Direct Material 60 840000    Direct labor 13 182000    Machinery repairs 2.85 39900     Utilities 2.5 35000     Packaging 4 56000      Shipping 5.8 81200 Total variable cost 88.15 1586700     Depriciation-plant equipment 250000 250000     Utlities 150000 150000      Plant management salaries 140000 140000      Sales salary 160000 160000      Advertising 81000 81000      Salaries 241000 241000      Entertainment expense 90000 90000 total fixed cost 1112000 1112000 Income from operations -598700 Income from operations would decrease by ( 125000 + 598700) 723700

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