Big Construction's actual results and the Master or Static budget information for the month of May is below. Big Construction is in the process of preparing the flexible budget and understanding the results. Actual Results Flexible Budget Static Budget Sales volume (in units) 13,000 10,000 Sales revenues $275,000 $250,000 Variable costs 200,000 175,000 Contribution Margin 75,000 75,000 Fixed costs 50,500 49,500 Operating profit $24,500 25,500 Using all information above, what is the flexible budget operating profit?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question 18 options:
Big Construction's actual results and the Master or Static budget information for the month of May is below. Big Construction is in the process of preparing the flexible budget and understanding the results.
| Actual Results |
Flexible Budget |
Static Budget |
||
| Sales volume (in units) | 13,000 | 10,000 | ||
|
|
$275,000 |
$250,000 |
||
| Variable costs | 200,000 | 175,000 | ||
| Contribution Margin | 75,000 | 75,000 | ||
| Fixed costs | 50,500 | 49,500 | ||
| Operating profit | $24,500 | 25,500 |
Using all information above, what is the flexible budget operating profit?
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