) The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results.
Actual Flexible Static
Results Budget Budget
Sales volume (in units) 15,000 11,000
Sales revenues $245,000 $ $235,000
Variable costs 139,000 $ ________ 184,000
Contribution margin 106,000 $ 51,000
Fixed costs 42,000 $ ________ 31,000
Operating profit $64,000 $ $20,000
Fill in the blanks for the Flexible Budget.
Flexible budget flexes itself to actual units of sales.it adjusts budgeted costs to actual units.
variable costs per unit of budgeted units are found and multiplied with actual units.however total fixed costs are constant and remains same as budgeted at all levels of activity.
| Actual results | flexible budget | static budget | ||
| sales volume (units) | 15,000 | 15,000 | 11,000 | |
| sales revenues | $245,000 | $320,455 | $235,000 | |
| variable costs | $139,000 | $250,909 | $184,000 | |
| contribution margin | $106,000 | $69,546 | $51,000 | |
| fixed costs | $42,000 | $31,000 | $31,000 | |
| operating profit | $64,000 | $38,546[$69,546-31,000] | $20,000 | |
sales revenue = $235,000/11000 *actual units 15000
=$320,455
variable costs = $184,000/11000*15000
=$250,909
contribution margin= sales-variable costs
=320,455-250,909
=$69,546
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