Question

V. Using the base information in IV, show a flex budget income statement (no inventory) for next year in yariable costing format based on units sold. Assume price will increase to $53 per unit. All other costs remain consistent with the prior year. Calculate for scenarios for 25,000 units, 30,000 units and 35,000 units sold. (10 points). 0=25/000 1325000 400 000 150000 775ro00 3 60/000 30,000 1590000 4Wrogo 1R0, 000 301000 35,00 55000 560r000 210/000 Sale's Var Aodxlb Vay Sh/t 1 085000 Fred Prod 3 b0r000 360.000 fixed SeA 150r000 2651000 150,000 NI. 575000 VI. Use the base information in IV and V. The company actually sold 27,000 units at $52.50. Variable production costs were $425,000. Variable SGA was $165,000. Fixed production was $350,000 and fixed SGA was $155,000. Prepare a flex budget report with variances (indicate favorable or unfavorable). (10 points). Actoal 411500 Bud get Sale s,x2 1404 00J Var 13500 F 7I0 4251a0 Nar frod ib. Yor SGA xL 4 32000 165r.o00 3000- F 162000 27500 FIJdou Fryed Prod 360.03J CA d000 15J.00u 55100 filed SeA NO 12lgt 22500

Managerial accounting.

Not sure if they're correct. Can someone work it out? V and VI

I added IV as the datasheet info.

Answer 1

Answer is given below

there are few mistakes in your working

In Q. No. IV- Variable SGA is $150,000 for 30,000 units but you have taken it for 25,000 units in Q No. V

In Q No. VI Selling price should be $53 for Budget but you have taken $52. Also note down U and F . If expenses are less than budget it should be F and not U

Complete answer is given below. let me know if you have any doubts.

Flexible Budget Units 25,000 30,000 35,000 Sales $1,325,000 $1,590,000 $1,855,000 Less: Variable Cost Variable Production Cost $400,000 $480,000 $560,000 Variable SGA $125,000 $150,000 $175,000 Contribution Margin $800,000 $960,000 $1,120,000 Less: Fixed Cost Manufacturing $360,000 $360,000 $360,000 SGA $150,000 $150,000 $150,000 Total Fixed Cost | $510,000 $510,000 $510,000 Net Income $290,000 $450,000 $610,000 Flexible Budget Performance Report Favourable/ Budget Actual Variance Unfavourable Units 27,000 27,000 Sales $1,431,000 $1,417,500 $13,500 unfavourable Less: Variable Cost Variable Production Cost $432,000 $425,000 $7,000 Favourable Variable SGA $135,000 $165,000 $30,000 Unfavourable Contribution Margin $864,000 $827,500 $36,500 Unfavourable Less: Fixed Cost Manufacturing $360,000 $350,000 $10,000 Favourable SGA $150,000 $155,000 -$5,000 Unfavourable Total Fixed Cost $510,000 $505,000 $5,000 Favourable Net Income $354,000 $322,500 $31,500 Unfavourable