Question

Question text

FLEXIBLE BUDGET

Projections:
Units sold = 5000 units
Unit sales price = $20 per unit
Cost of goods sold = $5,000 per month and $10 per unit
Selling and administrative expense = $20,000 per month and $3 per unit

So for the month of March, create the flexible budget (select from each dropdown box):

March Flexible Operating Budget
Total Sales	Choose...10,000100,00050,00020,00015,0005,00065,00025,000
Variable costs:
Cost of goods sold	Choose...10,000100,00050,00020,00015,0005,00065,00025,000
Selling and administrative costs	Choose...10,000100,00050,00020,00015,0005,00065,00025,000
Total Variable costs:	Choose...10,000100,00050,00020,00015,0005,00065,00025,000
Fixed costs:
Cost of goods sold (fixed)	Choose...10,000100,00050,00020,00015,0005,00065,00025,000
Selling and administrative costs	Choose...10,000100,00050,00020,00015,0005,00065,00025,000
Total Fixed Costs	Choose...10,000100,00050,00020,00015,0005,00065,00025,000
Estimated Income from Operations	Choose...10,000100,00050,00020,00015,0005,00065,00025,000

Answer 1

March Flexible Operating Budget is been prepared as below:
Amount in $

March Flexible Operating Budget	Budget for 10,000 units	Budget for 1,00,000 units	Budget for 50,000 units	Budget for 20,000 units	Budget for 15,000 units	Budget for 5,000 units	Budget for 65,000 units	Budget for 25,000 units
(A)Total Sales (No. of Units * $20)	2,00,000	20,00,000	10,00,000	4,00,000	3,00,000	1,00,000	13,00,000	5,00,000
Variable costs:
(1) Cost of goods sold (No. of Units * $10)	1,00,000	10,00,000	5,00,000	2,00,000	1,50,000	50,000	6,50,000	2,50,000
(2) Selling and administrative costs (No. of Units * $3	30,000	3,00,000	1,50,000	60,000	45,000	15,000	1,95,000	75,000
(B)Total Variable costs (1+2)	1,30,000	13,00,000	6,50,000	2,60,000	1,95,000	65,000	8,45,000	3,25,000
Fixed costs:
Cost of goods sold (fixed) (3)	5,000	5,000	5,000	5,000	5,000	5,000	5,000	5,000
Selling and administrative costs (4)	20,000	20,000	20,000	20,000	20,000	20,000	20,000	20,000
(C)Total Fixed Costs   (3+4)	25,000	25,000	25,000	25,000	25,000	25,000	25,000	25,000
Estimated Income from Operations A – (B+C)	$45,000	$6,75,000	$3,25,000	$1,15,000	$80,000	$10,000	$4,30,000	$1,50,000

Working Notes:

Total Sales = No. of Units estimated * $20

Variable Cost:

1. Cost of Goods Sold (Variable) = No. of Units Sold * $10

2. Selling and Administrative Cost (Variable) = No. of Units Sold * $3

Total Variable Cost = Cost of Goods Sold (Variable) + Selling and Administrative Cost (Variable)

Fixed Cost (Irrespective of No. of Units Sold) :

1. Cost of Goods Sold (Fixed) = $5,000

2. Selling and Administrative Cost (Fixed) = $20,000

Total Fixed Cost = Cost of Goods Sold (Fixed) + Selling and Administrative Cost (Fixed)

Estimated Income form Operations = Total Sales - (Total Variable Cost + Total Fixed Cost)