Question

musa company prepared the following static budget based on sales projections of 5,000 units:revenue$ 50,000variable costs30,000contribution margin20,000fixed costs5,000net income15,000what would be reported for net income on a flexible budget, assuming 10,000 units were sold?multiple choice$30,000$25,000$40,000$35,000

Answer 1

The net income on a flexible budget, assuming 10,000 units were sold, would be $30,000.

Step-by-step explanation:

The given static budget is based on sales projections of 5,000 units. In this budget, the company reported a net income of $15,000. To calculate the net income on a flexible budget, assuming 10,000 units were sold, we need to adjust the budget based on the actual sales volume.

Using proportionality, we can calculate the adjusted net income as follows:
Net Income on static budget / Number of units on static budget = Net Income on flexible budget / Number of units on flexible budget
$15,000 / 5,000 units = Net Income / 10,000 units
Net Income on flexible budget = $30,000

Therefore, the correct answer is $30,000.