Question 2 (of 1) value: 1.00 points Brodrick Company expects to produce 20,500

Question

Question 2 (of 1) value: 1.00 points Brodrick Company expects to produce 20,500 units for the year ending December 31 A flexible budget for 20,500 units of production reflects sales of $512,500; variable costs of $82,000, and fixed costs of $170,000 If the company instead expects to produce and sell 27,600 units for the year, calculate the expected level of income from operations. Flexible Budget.. -Flexible Budget at Variable Amount per Unit Total Fixed Cost 20,500 units 27,600 units Sales e cost Contribution margin xed costs ncome from operations

Explanation / Answer

Answer:-

Where:-

Selling price at 20500 units = Total sales/Units

                                                             = $512500/20500 = $25 per unit

               Selling price at 27600 units= 27600 units*$25 per unit

                                                             = $690000

Variable cost per unit at 20500 units = Total variable cost/total units

                                                            = $82000/20500 = $4 per unit

Variable cost at 27600 units = 27600 units*$4 per unit = $110400

Fixed cost will remain at both level.There is no change in fixed cost, otherwise mentioned.

Flexible Budget Particlulars Level (Units) 20500 27600 Amount $ Amount $ Sales 512500 690000 Less:- Variable cost 82000 110400 Contribution 430500 579600 Less:- Fixed cost 170000 170000 Income from opreations 260500 409600

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