Question

In September, Larson Inc. sold 40,000 units of its only product for $240,000 and incurred a total cost of $225,000, of which $25,000 is fixed costs. The flexible budget for September showed total sales of $300,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $63,000U; and, sales volume variance, in terms of contribution margin, $27,000U.The total sales revenue in the master budget for September was?The total number of budgeted units reflected in the master budget for September was?

Answer 1

total sales revenue = $375,000

master budget sales units = 50,000

Step-by-step explanation:

The computation of total sales revenue in the master budget for September and total number of budgeted units reflected in the master budget for September is shown below:-

Actual Flexible budget Master

Units 40,000 40,000 50,000 Units

Sales $240,000 $60,000 U $300,000 $75,000 U $375,000

Variable

cost $200,000 $8,000 U $192,000 $48000 F $240,000

Contribution

margin $40,000 $68,000 U $108,000 $27,000 U $135,000

Fixed cost $25,000 $5,000 F $30,000 0 $30,000

Net income $15,000 $63,000 U $78,000 $27,000 U $105,000

So total sales revenue = $135,000 × $300,000 ÷ $108,000

= $375,000

Sales price per unit = $300,000 ÷ 40,000

= 7.5

As per master budget sales units = 375000 ÷ 7.5

= 50,000 units