Question

Brodrick Company expects to produce 21,400 units for the year ending December 31. A flexible budget for 21,400 units of production reflects sales of $470,800; variable costs of $64,200; and fixed costs of $141,000.

If the company instead expects to produce and sell 27,000 units for the year, calculate the expected level of income from operation
Answer is not complete.
---Flexible Budget--- ---Flexible Budget at---
Variable Amount Total Fixed 21,400 27,000
per Unit Cost units units
Sales $ 22.00 $ 470,800 $ 594 000
Variable cos! 3.00 64,200 81,000
Contribution margin $ 1900 $ 406,600 $ 513.000
Fixed costs 141,000
Income from operations $ 406,600 $ 513,000

Answer 1

Answer:

Income from operations for 21,400 units

$ 406,600

Income from operations for 27,000 units

$ 513,000

Step-by-step explanation:

Calculation for the expected level of income from operation for Brodrick Company

Flexible budget Flexible budget at

Variable amount per unit Total fixed cost

21,400 units 27,000 units

Sales $ 22.00 $ 470,800 $ 594 000

Variable cost 3.00 64,200 81,000

Contribution margin $ 19.00 $ 406,600 $ 513.000

Fixed costs 141,000 141,000 141,000

Income from operations $ 406,600 $ 513,000

Note:

Sales (21,400 units)

$ 470,800/21,400 units

$ 22.00

Sales (27,000 units)

$22*27,000 units

$594,000

Variable cost (21,400 units)

$64,200/21,400 units

$ 3.00

Variable cost (27,000 units)

$3*27,000 units

$81,000

Contribution margin =Sales - Variable cost