Question

The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department ofWooden Figurines Incorporated had developed the following static budget for the third quarter. Duck Decoy is in theprocess of preparing the flexible budget and understanding the results.Actual Flexible StaticResults Budget BudgetSales volume (in units) 13,000 ______12,000Sales revenues $257,500 _______ $250,000Variable costs 154,000 ________ 175,000Contribution margin 103,500 ________ 75,000Fixed costs 50,500 $ ________ 49,500Operating profit $ 53,000 $_________ $ 25,5009) The flexible budget will report ________ for variable costs.A) $154,000B) $175,000C) $13,583D) $189,58310) The flexible budget will report ________ for the fixed costs.A) $49,500 FavorableB) $49,500C) $1,000 UnfavorableD) $50,500

Answer 1

A. D) $189,583

B. B. $49,500

Step-by-step explanation:

A. The computation of the flexible budget will report for the variable cost is shown below:-

= Static Variable cost ÷ Static sales volume × Actual sales volume

= $175,000 ÷ 12,000 × 13,000

= $189,583.33

B. The number of fixed costs in both flexible budget and static budget would be the same

= $49,500

So, flexible budget will report $49,500 for the fixed costs