Using the static budget, calculate the variable cost/unit and prepare a flexible budget.Do not enter dollar signs or commas in the input boxes.Round all answers to the nearest whole number.Static Budget Variable Cost/Unit Flexible BudgetUnits Produced and Sold 9,200 1 8,400Revenue 432,400 Answer AnswerVariable Costs 156,400 Answer AnswerContribution Margin 276,000 Answer AnswerFixed Costs 38,000 AnswerOperating Income 238,000 Answer
Question
Using the static budget, calculate the variable cost/unit and prepare a flexible budget.Do not enter dollar signs or commas in the input boxes.Round all answers to the nearest whole number.Static Budget Variable Cost/Unit Flexible BudgetUnits Produced and Sold 9,200 1 8,400Revenue 432,400 Answer AnswerVariable Costs 156,400 Answer AnswerContribution Margin 276,000 Answer AnswerFixed Costs 38,000 AnswerOperating Income 238,000 Answer
Solution
To calculate the variable cost per unit, we need to divide the total variable costs by the number of units produced and sold.
Step 1: Calculate Variable Cost per Unit Variable Cost per Unit = Total Variable Costs / Units Produced and Sold Variable Cost per Unit = 156,400 / 9,200 = 17 (rounded to the nearest whole number)
Now, we can prepare a flexible budget for 8,400 units.
Step 2: Calculate Revenue Revenue = Price per Unit * Units Sold We can find the price per unit from the static budget by dividing the total revenue by the units sold. Price per Unit = Total Revenue / Units Sold Price per Unit = 432,400 / 9,200 = 47 (rounded to the nearest whole number) So, Revenue = 47 * 8,400 = 394,800
Step 3: Calculate Variable Costs Variable Costs = Variable Cost per Unit * Units Sold Variable Costs = 17 * 8,400 = 142,800
Step 4: Calculate Contribution Margin Contribution Margin = Revenue - Variable Costs Contribution Margin = 394,800 - 142,800 = 252,000
Step 5: Calculate Operating Income Operating Income = Contribution Margin - Fixed Costs Operating Income = 252,000 - 38,000 = 214,000
So, the flexible budget would look like this:
Units Produced and Sold: 8,400 Revenue: 394,800 Variable Costs: 142,800 Contribution Margin: 252,000 Fixed Costs: 38,000 Operating Income: 214,000
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