Question

Odessa, Inc., reports the following information concerning operations for the most recent month:

    

	Actual (based on actual of 540 units)						Master Budget (based on budgeted 600 units)
Sales revenue		$	100,320					$	108,000
Less
Manufacturing costs
Direct labor			13,050						13,800
Materials			12,460						14,400
Variable overhead			6,030						7,800
Marketing			5,080						5,760
Administrative			4,200						4,200
Total variable costs		$	40,820					$	45,960
Contribution margin		$	59,500					$	62,040
Fixed costs
Manufacturing			4,360						4,500
Marketing			10,280						9,900
Administrative			9,861						9,900
Total fixed costs		$	24,501					$	24,300
Operating profits		$	34,999					$	37,740

  
There are no inventories.

  

Required:

Prepare a flexible budget for Odessa, Inc. (Do not round intermediate calculations.)

Answer 1

Answer:

	Master Budget	Flexible Budget
Sales revenue	$   108,000.00	$      97,200.00
Less:
Manufacturing costs
Direct labor	$     13,800.00	$      12,420.00
Materials	$     14,400.00	$      12,960.00
Variable overhead	$       7,800.00	$        7,020.00
Marketing	$       5,760.00	$        5,184.00
Administrative	$       4,200.00	$        3,780.00
Total variable costs	$     45,960.00	$      41,364.00
Contribution margin	$     62,040.00	$      55,836.00
Fixed costs
Manufacturing	$       4,500.00	$        4,500.00
Marketing	$       9,900.00	$        9,900.00
Administrative	$       9,900.00	$        9,900.00
Total fixed costs	$     24,300.00	$      24,300.00
Operating profits	$     37,740.00	$      31,536.00

Calculations:

In case of any doubt, please feel free to comment.