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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 635,100;variablecostsof635,100; 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.

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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 = 65,700/21,900units=65,700 / 21,900 units = 3 per unit

Step 2: Calculate the selling price per unit Selling price per unit = Total sales / Total units = 635,100/21,900units=635,100 / 21,900 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 = 29perunit26,300units=29 per unit * 26,300 units = 762,700

Total variable costs = Variable cost per unit * Actual units sold = 3perunit26,300units=3 per unit * 26,300 units = 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 = 762,700762,700 - 78,900 - 143,000=143,000 = 540,800

So, the flexible budget income for the production and sale of 26,300 units is $540,800.

This problem has been solved

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