Question

In: Accounting

       The following information is from Franklin Industries master budget for 2008: Number of units...

       The following information is from Franklin Industries master budget for 2008:

Number of units

   15,000

Sales revenue

$585,000

Direct materials

165,000

Direct labor

90,000

Variable factory overhead

120,000

Fixed factory overhead

75,000

Variable selling and administrative expenses

60,000

Fixed selling and administrative expenses

20,000

Prepare flexible budgets for the production and sale of 14,000, 15,000 and 16,000 units, respectively.

Solutions

Expert Solution

Franklin Industries
Flexible budget
Units                14,000                    15,000                      16,000
Sales revenue $ 5,46,000.00 $      5,85,000.00 $        6,24,000.00
Variable costs
Direct material $ 1,54,000.00 $      1,65,000.00 $        1,76,000.00
Direct labor $      84,000.00 $          90,000.00 $            96,000.00
Variable factory overhead $ 1,12,000.00 $      1,20,000.00 $        1,28,000.00
Variable selling and administrative expenses $      56,000.00 $          60,000.00 $            64,000.00
Total Variable costs $ 4,06,000.00 $      4,35,000.00 $        4,64,000.00
Contribution margin $ 1,40,000.00 $      1,50,000.00 $        1,60,000.00
Fixed costs
Fixed factory overhead $      75,000.00 $          75,000.00 $            75,000.00
Fixed selling and administrative expenses $      20,000.00 $          20,000.00 $            20,000.00
Total Fixed expenses $      95,000.00 $          95,000.00 $            95,000.00
Operating income $      45,000.00 $          55,000.00 $            65,000.00

Working

Master budget
Total   Per unit
Units                15,000
Sales revenue $ 5,85,000.00 $ 39.00
Direct material $ 1,65,000.00 $ 11.00
Direct labor $      90,000.00 $    6.00
Variable factory overhead $ 1,20,000.00 $    8.00
Variable selling and administrative expenses $      60,000.00 $    4.00

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