COMPLETE QUESTION IS AS UNDER:
LO 7.4 Prepare a flexible budgeted income statement for 47,000 units using the following information from a static budget for 45,000 units:
$
Sales price 50
DIRECT MATERIAL COST per unit 12
DIRECT LABOR COST per unit 5
VARIABLE MANUFACTURING overhead per unit 3
FIXED MANUFACTURING OH $25,000
VARIABLE SALES AND ADMINISTRATION COST per unit 3
FIXED SALES AND ADMINISTRATION EXPENSE $9,000
TAXES @15% OF INCOME BEFORE TAXES
Answer:
FLEXIBLE BUDGETED INCOME STATEMENT FOR ACTUAL PRODUCTION 47000 UNITS
$
SALES REVENUE (50*47,000) 2,350,000
COST OF SALE
DIRECT MATERIAL COST (12*47,000) 564,000
DIRECT LABOR COST (5*47,000) 235,000
V.MANUFACTURING OH (3*47,000) 141,000 (940,000)
OPERATING PROFIT 1,410,000
FIXED MANUFACTURING OH (25,000)
V.SALES AND ADMINISTRATION COST (3*47,000) (141,000)
FIXED SALES AND ADMINISTRATION EXPENSE (9,000)
PROFIT BEFORE INTEREST AND TAX 1,235,000
TAX @15% (1,235,000*30%) (185250)
PROFIT AFTER TAX 1,049,750
Step-by-step explanation:
Flexed budget is based on very simple formula which is:
Total cost = Cost rate per unit * Numbers of actual units sold