Question

In September, Larson Inc. sold 41,500 units of its only product for $405,000, and incurred a total cost of $375,000, of which $40,000 were fixed costs. The flexible budget for September showed total sales of $450,000. Among variances of the period were: total variable cost flexible-budget variance, $9,500U; total flexible-budget variance, $78,000U; and, sales volume variance, in terms of contribution margin, $42,000U.

The total number of budgeted units reflected in the master budget for September, to the nearest whole number, was:

Multiple Choice

• 36,000 units.

• 41,500 units.

• 65,500 units.

• 51,000 units.

• 55,500 units.

Answer 1

Answer
The correct Option is D : 55,500
Explanation
1
Actual variable costs	335000	375000-40000
Variable costs in flexible budget	325500	335000-9500
Standard amounts per unit:
Sales	10.84	450000/41500
Variable costs	7.84	325500/41500
Contribution margin	3
Less units sold	14000	42000/3
Number of budgeted units in the master budget	55500	41500+14000
Option D 55,500 units is correct