Question

Using the following per-unit and total amounts, prepare a flexible budget at the 12,000 unit, and...

  1. Using the following per-unit and total amounts, prepare a flexible budget at the 12,000 unit, and 14,000 unit levels of production and sales for Earthen Products Inc.:

Selling price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 75.00

Direct materials per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 24.00

Direct labor per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8.00

Variable factory overhead per unit. . . . . . . . . . . . . . . . . . . . . . . .

$ 15.00

Fixed factory overhead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$75,000

Variable selling and administrative expense per unit . . . .

$ 12.00

Fixed selling and administrative expense . . . . . . . . . . . . . . . .

$80,000

Answers:

Flexible Budget

12,000 Units

14,000 Units

Sales

Less variable costs:

        Direct materials

        Direct labor

        Variable factory overhead

        Variable selling and administrative expense

    Total variable costs

Contribution margin

Less fixed costs:

       Fixed factory overhead

       Fixed selling and administrative expense

    Total fixed costs

Operating income
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