Brodrick Company expects to produce 21,800 units for the year ending December 31. A flexible budget for 21,800 units of production reflects sales of $610,400; variable costs of $65,400; and fixed costs of $142,000. 1a) If the company instead expects to produce and sell 27,100 units for the year, calculate the expected level of income from operations. 1b)Assume that actual sales for the year are $711,800 (27,100 units), actual variable costs for the year are $113,200, and actual fixed costs for the year are $138,000. Prepare a flexible budget performance report for the year. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)
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.
Brodrick Company expects to produce 21,800 units for the year ending December 31. A flexible budget for 21,800 units of production reflects sales of $610,400; variable costs of $65,400; and fixed costs of $142,000.
1a) If the company instead expects to produce and sell 27,100 units for the year, calculate the expected level of income from operations.
1b)Assume that actual sales for the year are $711,800 (27,100 units), actual variable costs for the year are $113,200, and actual fixed costs for the year are $138,000.
Prepare a flexible budget performance report for the year. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)
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