Need explanation on doing flexible budget based on three levels of production with example.

Expert Solution

	Fixed Budget	Flexible budget
		Example 1	Example 2	Example 3
Units produced and sold	10,000	8,000	11,000	12,000
Sales ($100 per unit)	$ 1,000,000	$ 800,000	$ 1,100,000	$ 1,200,000
Less: Cost of goods sold ($40 per unit)	$ 400,000	$ 320,000	$ 440,000	$ 480,000
Gross margin	$ 600,000	$ 480,000	$ 660,000	$ 720,000
Less: Fixed cost	$ 200,000	$ 200,000	$ 200,000	$ 200,000
Net Income	$ 400,000	$ 280,000	$ 460,000	$ 520,000

ekkarill92 answered 1 year ago

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