Brodrick Company expects to produce 21,100 units for the year ending December 31

Question

Brodrick Company expects to produce 21,100 units for the year ending December 31. A flexible budget for 21,100 units of production reflects sales of $548,600; variable costs of $63,300; and fixed costs of $144,000.

If the company instead expects to produce and sell 27,100 units for the year, calculate the expected level of income from operations.
  

Brodrick Company expects to produce 21,100 units for the year ending December 31. A flexible budget for 21,100 units of production reflects sales of $548,600; variable costs of $63,300; and fixed costs of $144,000.

Assume that actual sales for the year are $662,600 (27,100 units), actual variable costs for the year are $113,800, and actual fixed costs for the year are $137,000.

Prepare a flexible budget performance report for the year.

------Flexible Budget------ ------Flexible Budget at ------ Variable Amount per Unit Total Fixed Cost 21,100 units 27,100 units Contribution margin $0.00 $0 $0 $0 $0

Explanation / Answer

-Flexible Budget------ ------Flexible Budget at ------ Variable Amount per Unit Total Fixed Cost 21,100 units 27,100 units Sales 26 548600 704600 Variable costs 3 63300 81300 Contribution margin 23 485300 623300 fixed costs 144000 144000 144000 Income from operations. 341300 479300 BRODRICK COMPANY Flexible Budget Performance Report For Year Ended December 31 Flexible Budget Actual Results Variances Favorable/ Unfavorable Sales 704600 662600 42000 Unfavorable Variable costs 81300 113800 32500 Unfavorable Contribution margin 623300 548800 74500 Unfavorable fixed costs 144000 137000 7000 Favorable Income from operations. 479300 411800 67500 Unfavorable

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