Question

Brodrick Company expects to produce 21,200 units for the year ending December 31. A flexible budget for 21,200 units of production reflects sales of $508,800; variable costs of $63,600; and fixed costs of $142,000. Assume that actual sales for the year are $587,200 (26,300 units), actual variable costs for the year are $113,900, and actual fixed costs for the year are $137,000. Prepare a flexible budget performance report for the year.

Answer 1

Flexible budget performance report for the year

Flexible budget Actual Variance Fav/Unf

Sales 631,200 587,200 44,000 UNF

Variable cost (78,900) (113,900) 35,000 F

Contribution 416,000 368,000 48,000 UNF

margin

Fixed cost (142,000) (137,000) 5000 UNF

Net operating 274,000 231,000 43,000 UNF

income

Working:

a. At flexible budget, selling price per unit = $508,800 / 21,200 = $24 per unit . Total sales =26,300 *24 = $631,200

b. Variable cost per unit = $63,600 / 21,200 = $3 per unit . Total cost = 3 * 26,300 = 78,900