Question

The fixed budget for 21,000 units of production shows sales of $525,000; varlable costs of $63,000; and fixed costs of $140,000. If the company actually produces and sells 26,900 units, calculate the flexible budget income

Answer 1

To calculate the flexible budget income, we need to determine the variable cost per unit and then apply the formula Sales - Variable Costs - Fixed Costs. Plugging in the values, the flexible budget income is $304,300.

Step-by-step explanation:

To calculate the flexible budget income, we need to determine the variable cost per unit. The variable cost per unit is calculated by dividing the total variable costs by the number of units. In this case, the total variable costs are $63,000 and the number of units are 21,000. So, the variable cost per unit is $63,000 / 21,000 = $3 per unit.

Now we can calculate the flexible budget income. The formula for calculating the flexible budget income is:

Flexible Budget Income = Sales - Variable Costs - Fixed Costs

Plugging in the values, we get:

Flexible Budget Income = $525,000 - ($3 * 26,900) - $140,000

Flexible Budget Income = $525,000 - $80,700 - $140,000

Flexible Budget Income = $304,300

Therefore, the flexible budget income is $304,300.