Question

A company's flexible budget for 12,300 units of production showed sales, $52,890; variable costs, $17,220; and fixed costs, $16,300. What is the income expected if the company produces and sells 16,300 units?

Answer 1

To estimate the expected income for producing and selling 16,300 units, we need to first determine the variable cost per unit from the given flexible budget, calculate the sales and variable costs for the increased production, and subtract the total costs from the sales for 16,300 units.

Step-by-step explanation:

The student's question revolves around determining the expected income from producing and selling 16,300 units given a flexible budget for 12,300 units of production. From the provided budget, we know that sales are $52,890, variable costs are $17,220, and fixed costs are $16,300 for 12,300 units of production. To find the income for 16,300 units, we need to calculate the new sales, variable costs, and then subtract the variable and fixed costs from the sales to estimate the income.

The first step is to find the variable cost per unit by dividing the total variable costs by the number of units (17,220 / 12,300). Next, we calculate the sales and variable costs for 16,300 units by extrapolating the per unit costs and sales. Finally, we sum the variable costs and fixed costs to estimate the total costs and then subtract this from the sales for 16,300 units to find the expected income.