Question

The actual information pertains to the month of June. As a part of the budgeting​ process, Great Cabinets Company developed the following static budget for June. Great Cabinets is in the process of preparing the flexible budget and understanding the results. ActualResults FlexibleBudget StaticBudget Sales volume​ (in units) 12,000 ​ ________ 16,000 Sales revenues $600,000 ​$ $800,000 Variable costs 240,000 ​$ ________ 322,240 Contribution margin ​$360,000 ​$ ​$477,760 Fixed costs 275,100 ​$ ________ 269,700 Operating profit $84,900 ​$ ________ $208,060 The flexible budget will report​ ________ for variable costs.

Answer 1

The flexible budget will report $241,680 for variable costs; this is calculated by finding the cost per unit from the static budget ($322,240/16,000 units) and then multiplying it by the actual units sold (12,000 units).

Step-by-step explanation:

The student's question requires completing the missing information for variable costs in the flexible budget based on the actual sales volume, which is lower than initially budgeted in the static budget for Great Cabinets Company. To calculate the variable costs for the flexible budget, we look at the cost per unit. If the static budget projected 16,000 units leading to $322,240 in variable costs, we can find the variable cost per unit by dividing $322,240 by 16,000 units, resulting in $20.14 per unit. We then multiply this cost per unit by the actual sales volume of 12,000 units, resulting in $241,680 in variable costs for the flexible budget.

The flexible budget will report $241,680 for variable costs based on the actual activity level for June.

Answer 2

The flexible budget will report​ $ 320,000 for variable costs.

Step-by-step explanation:

Great Cabinets Company

Actual Results Flexible Budget Static Budget

Sales volume​ (in units) 12,000 ​ ________ 16,000

Sales revenues $600,000 ​ $ $ 800,000

Variable costs 240,000 ​ $ ________ 322,240

Contribution margin ​$360,000 ​ $ ​ $477,760

Fixed costs 275,100 ​$ ________ 269,700

Operating profit $84,900 ​$ ________ $208,060

The flexible budget will report​ ________ $ 320,000 for variable costs.

For 16000 units the Flexible Budget would be

Sales Revenue ($600,000 /12000)16000 =$ 800,000

Variable Costs (240,000 /12000)16000 = $ 320,000

Contribution Margin $ 480,000

Fixed Costs 275,100 ( assuming fixed costs to be same

for 16000 units)

Operating Profit 204,900