Use the following data to prepare a flexible budget. Make sure to show the contr

Question

Use the following data to prepare a flexible budget. Make sure to show the contribution margin.

Budgeted

Actual

Number of units

5,000

6,000

Sales price (per unit)

$12.00

$10.00

Variable costs per unit:

Manufacturing

$6.00

$7.00

Selling and Administrative

$2.00

$3.00

Fixed costs per unit:

Manufacturing

$10,000

$10,000

Administrative

$5,000

$6,000

Budgeted

Actual

Number of units

5,000

6,000

Sales price (per unit)

$12.00

$10.00

Variable costs per unit:

Manufacturing

$6.00

$7.00

Selling and Administrative

$2.00

$3.00

Fixed costs per unit:

Manufacturing

$10,000

$10,000

Administrative

$5,000

$6,000

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Flexible Budget is prepared for Actual Units with Budgeted Selling Price Per Unit, Variable Cost Per Unit and Fixed Expenses.

Thanks.

Flexible Budget for 6000 Units Sales (6000*12) 72000 Less Variable Costs: Manufacturing (6000*6) 36000 Selling and Administrative (6000*2) 12000 Contribution Margin 24000 Less Fixed Cost: Manufacturing 10000 Administrative 5000 Net Income 9000

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