The Budgeted Standards for Carpenter, Inc. for May 2012 are as follows: Units So

Question

The Budgeted Standards for Carpenter, Inc. for May 2012 are as follows:

Units Sold:  2,963

Sales Price per unit:  $7.48

Direct Materials Cost per unit:  $1.14

Direct Labor Cost per hour:  $24

Units produced per hour:  443

Direct Marketing Costs per unit:  $0.37

Fixed Overhead Costs:   $1,430

The Actual Results for Carpenter, Inc. for May 2012 are as follows:

Units Sold:  87% of budgeted units sold

Sales Price per unit:  $7.3

Direct Materials Cost per unit:  $1.34

Direct Labor Cost per hour:  $24

Units produced per hour:  407

Direct Marketing Costs per unit:  $0.47

Fixed Overhead Costs:  $53 below budgeted cost

What is the Flexible Budget Operating Income?

Explanation / Answer

Flexible Budget Operating Income will be made using actual sales units with the budgeted cost per unit.

Sales ( 2963 * 80 % * 7.48 ) - Direct Materials (  2963 * 80 % * 1.14 ) - Direct Labour ( [ (2963 * 80 %) / 443 units per hour] * 24 ) - Direct Marketing Costs (  2963 * 80 % * 0.37 ) - Fixed Overhead Costs 1430 = Flexible Budget Operating Income

17730 - 2702 - 128 - 877 - 1430 = $ 12593

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