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Concept explainers
Fixed Budget:
A fixed budget is prepared based on one specific projected level of production and it cannot be altered if there is a difference between the projected production and actual production.
Flexible Budget:
Flexible budget is prepared based on the actual level of production. A flexible budget is prepared for different levels of production, so it can be adjusted according to the changes in actual level of production.
To determine:
1. Classification of variable and fixed items in the fixed budget and determine their amounts or their amounts for the year.
2. Preparation of flexible budget at sales volumes of 14,000 and 16,000 units.
3. Calculate the increase in operating income if the sales volume increases to 18,000 units compared to budgeted operating income of $159,000.
4. Computation of operating income (loss) if the sales volume falls to 12,000 units.
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Chapter 23 Solutions
Loose Leaf for Fundamental Accounting Principles
- what is the level of fixed costs? general accountingarrow_forwardwhat is the level of fixed costs?arrow_forwardLui Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at March 31: ACCOUNT ACCOUNT NO. Date Item Debit Credit BalanceDebit BalanceCredit March 1 Bal., 25,000 units, 10% completed 21,250 31 Direct materials, 600,000 units 450,000 471,250 31 Direct labor 244,600 715,850 31 Factory overhead 415,820 1,131,670 31 Goods transferred, 605,000 units ? 31 Bal., ? units, 45% completed ? Required:1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
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