Question

Amanda Manufacturing Company prepared the following static budget income statement: Revenues $ 452,250 Variable Costs (317,250...

Amanda Manufacturing Company prepared the following static budget income statement:
Revenues $ 452,250
Variable Costs (317,250 )
Contribution Margin 135,000
Fixed Costs (64,000 )
Net Income $ 71,000

The budgeted costs were based on a planned sales volume of 13,500 units. Actual production was 7,700 units.

The amount of net income based on a flexible budget of 7,700 units would have been? Please show your work.

Multiple Choice

  • $5,300.

  • $7,300.

  • $13,000.

  • $253,250.

Business   Accounting   
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Homework Answers

Answer #1
Flexible Budget
Units 7,700
Revenues        257,950 =452250/13500*7700
Less: Variable Costs      -180,950 =317250/13500*7700
Contribution Margin           77,000
Less: Fixed Costs          -64,000
Net Income           13,000
Correct answer is option 3 .
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