Question

Assume no safety inventory

Prepare a flexible income statement budget for three production levels of Crow Co.

Production: 5,000 units; 8,000 units, 10,000 units.

Price per unit: $45

Costs of Goods Sold:

Direct Material: 11% of total revenues, Direct Labor: 12% of total revenues, Factory Overhead: 5% of total revenues. Fixed Costs = $8,000

Expenses:

Administrative Expenses: 5% of Gross Profit, Selling Expenses: 10% of Gross Profit. Tax Expense: 20% of operating profit

Crow Co. Flexible Income Statement, Dec/31/20XY

Production Level	50,000	80,000	100,000
Revenues	$45/unit
Cost of goods sold:

Answer 1

	5000	8000	10000
Revenues	5,000*$45 = $225,000	8,000*$45 = $360,000	10,000*$45 = $450,000
Less: Cost of goods sold
Direct Materials	$225,000*11% = $24,750	$360,000*11% = $39,600	$450,000*11% = $49,500
Direct labor	$225,000*12% = $27,000	$360,000*12% = $43,200	$450,000*12% = $54,000
Factory Overhead	$225,000*5% = $11,250	$360,000*5% = $18,000	$450,000*5% = $22,500
Fixed overhead	$                                     8,000	$                                     8,000	$                                     8,000
Total cost of goods sold	$                                   71,000	$                                 108,800	$                                 134,000
Gross profit	$                                 154,000	$                                 251,200	$                                 316,000
Administrative Expenses	$154,000*5% = $7,700	$251,200*5% = $12,560	$316,000*5% = $15,800
Selling expenses	$154,000*10% = $15,400	$251,200*10% = $25,120	$316,000*10% = $31,600
Operating profit	$                                 130,900	$                                 213,520	$                                 268,600
Tax expenses	$130,900*20% = $26,180	$213,520*20% = $42,704	$268,600*20% = $53,720
Net income	$                                 104,720	$                                 170,816	$                                 214,880

You can reach me over comment box if you have any doubts. Please rate this answer