Required informationSkip to question[The following information applies to the questions displayed below.]The fixed budget for 21,900 units of production shows sales of $635,100; variable costs of $65,700; and fixed costs of $143,000.If the company actually produces and sells 26,300 units, calculate the flexible budget income.
Question
Required informationSkip to question[The following information applies to the questions displayed below.]The fixed budget for 21,900 units of production shows sales of 65,700; and fixed costs of $143,000.If the company actually produces and sells 26,300 units, calculate the flexible budget income.
Solution
To calculate the flexible budget income, we first need to determine the variable cost per unit and the selling price per unit from the fixed budget.
Step 1: Calculate the variable cost per unit Variable cost per unit = Total variable costs / Total units = 3 per unit
Step 2: Calculate the selling price per unit Selling price per unit = Total sales / Total units = 29 per unit
Step 3: Calculate the total sales, total variable costs, and total fixed costs for the actual units produced and sold.
Total sales = Selling price per unit * Actual units sold = 762,700
Total variable costs = Variable cost per unit * Actual units sold = 78,900
Total fixed costs remain the same as given in the question, which is $143,000.
Step 4: Calculate the flexible budget income Flexible budget income = Total sales - Total variable costs - Total fixed costs = 78,900 - 540,800
So, the flexible budget income for the production and sale of 26,300 units is $540,800.
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