1. John Holland established the following standard price and cost data. Sales Pr

ID: 2601284 • Letter: 1

Question

1. John Holland established the following standard price and cost data. Sales Price Raw Materials Labor Overhead Variable Selling and Adm. Exp $0.80 per unit Fixed Manufacturing Costs $5,000 Fixed Selling and Adm. Costs$3,000 $9.00 per unit $1.50 per unit $3.00 per unit $1.75 per unit John Holland planned to produce and sell 12,000 units. Prepare a Flexible Budgets for 11,000, 13,000 and 15,000 units. Static Budget Flexible Budget Cost per Unit Number of units Sales Revenue $9.00 Variable Man. Costs: Raw Materials $1.50 Labor Overhead Variable GSA $0.80 Contribution Margin Fixed Costs: 12,000 11,000 13,000 15,000 $3.00 $1.75 Manufacturing G,S & A $5,000 $3,000 Net Income

Explanation / Answer

(a)

Number of Units

12000

11000

13000

15000

(b)

Sales Revenue

108000
(12000*9)

99000
(11000*9)

117000
(13000*9)

135000
(15000*9)

(c)

Variable Manufacturing Costs

(d)

Raw Materials

1.5

18000
(12000*1.5)

16500
(11000*1.5)

19500
(13000*1.5)

22500
(15000*1.5)

(e)

Labor

36000
(12000*3)

33000
(11000*3)

39000
(13000*3)

45000
(15000*3)

(f)

Overheads

1.75

21000
(12000*1.75)

19250
(11000*1.75)

22750
(13000*1.75)

26250
(15000*1.75)

(g)

Variable GSA

0.8

9600
(12000*0.8)

8800
(11000*0.8)

10400
(13000*0.8)

12000
(15000*0.8)

(h)

Contribution Margin [(b) - (d) - (e) - (f) - (g)]

23400

21450

25350

29250

(i)

Fixed Costs

(j)

Manufacturing

5000

(k)

G,S&A

3000

(l)

Net Income [(h) - (j) - (k)]

15400

13450

17350

21250

(a)