Reflector Glass Company prepared the following static budget for the year: Static Budget Units/Volume 5000 Per Unit Sales Revenue $7.00 $35,000 Variable Costs 1.50 7500 Contribution Margin 27,500 Fixed Costs 4000 Operating Income/(Loss) $23,500 If a flexible budget is prepared at a volume of 8400 units, calculate the amount of operating income. The production level is within the relevant range. Group of answer choices $23,500 $42,200 $4000 $12,600
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.
Reflector Glass Company prepared the following static budget for the year:
| Static Budget | ||
| Units/Volume | 5000 | |
| Per Unit | ||
| Sales Revenue | $7.00 | $35,000 |
| Variable Costs | 1.50 | 7500 |
| Contribution Margin | 27,500 | |
| Fixed Costs | 4000 | |
| Operating Income/(Loss) | $23,500 |
If a flexible budget is prepared at a volume of 8400 units, calculate the amount of operating income. The production level is within the relevant range.
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