Flexible Budget Preparation Garcia and Buffet, a local CPA firm, has budgeted $1

Question

Flexible Budget Preparation

Garcia and Buffet, a local CPA firm, has budgeted $150,000 in fixed expenses per month for the tax department. It has also budgeted variable costs of $4 per tax return prepared for supplies, $30 per return for labor, and $15 per return for computer time. The firm expects revenue from tax return preparation to be $550,000, based on 2,500 tax returns at $220 each. During the current month, 1,900 tax returns were actually prepared, at an average fee of $217 each. Actual variable costs were $9,000 for supplies, $61,000 for labor, and $22,000 for computer time. Actual fixed costs were $150,000.

Explanation / Answer

Flexible Budget Revenue [1900*220] 418000 variable expenses supplies [1900*4] 7600 Labor   [1900*30] 57000 computer time [1900*15] 28500 Total variable expense 93100 Gross profit 324900 Fixed expense -150000 Net income 174900

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.