Classification of items into fixed or variable: A fixed or static budget is a budget that do not tend to change with changes in volume or production while flexible budget is a budget that tends to change with change in volume or production. Classification of items into fixed or variable cost and to determine their per unit amount or annual amount, as the case may be.

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Answer 1

Question

Chapter 23, Problem 1APSA

To determine

Classification of items into fixed or variable:

A fixed or static budget is a budget that do not tend to change with changes in volume or production while flexible budget is a budget that tends to change with change in volume or production.

Classification of items into fixed or variable cost and to determine their per unit amount or annual amount, as the case may be.

Expert Solution

Explanation of Solution

Company P Fixed Budget Report For Year Ended December, 31
Particulars	Cost classification	Variable costper unit	Total variable cost($)	Fixed cost($)
Sales	Variable	200	3,000,000	-
Cost of good sold
Direct materials	Variable	65	975,000	-
Direct labour	Variable	15	225,000	-
Machinery repairs	Variable	4	60,000	-
Depreciation	Fixed	-	-	300,000
Utilities	Variable	3	45,000	150,000
Plant management salaries	Fixed	-	-	200,000
Selling expense
Packaging	Variable	5	75,000	-
Shipping	Variable	7	105,000	-
Sales salary	Fixed	-	-	250,000
General and administrative expense
Advertising expense	Fixed	-	-	125,000
Salaries	Fixed	-	-	241,000
Entertainment expense	Fixed	-	-	90,000
Total cost			1,485,000	1,356,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Expert Solution

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for
			14,000 units	16,000 units
Sales	200.00		2,800,000	3,200,000
Variable costs
Direct materials	65.00		910,000	1,040,000
Direct labour	15.00		210,000	240,000
Machinery repairs	4.00		56,000	64,000
Packaging	5.00		70,000	80,000
Utilities	3.00		42,000	48,000
Shipping	7.00		98,000	112,000
Total variable costs	99.00		1,386,000	1,584,000
Contribution margin	101.00		1,414,000	1,616,000
Fixed costs
Depreciation		300,000	300,000	300,000
Utilities		150,000	150,000	150,000
Plant management salaries		200,000	200,000	200,000
Sales salary	-	250,000	250,000	250,000
Advertising expense	-	125,000	125,000	125,000
Salaries	-	241,000	241,000	241,000
Entertainment expense	-	90,000	90,000	90,000
Total fixed cost			1,356,000	1,356,000
Income from operations			58,000	260,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 18,000 units.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows income from operation at $462,000.

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 18,000 units

Sales	200.00		$36,00,000
Variable costs
Direct materials	65.00		$11,70,000
Direct labour	15.00		$2,70,000
Machinery repairs	4.00		$72,000
Packaging	5.00		$90,000
Utilities	3.00		$54,000
Shipping	7.00		$126,000
Total variable costs	99.00		$1,782,000
Contribution margin	101.00		$1,818,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$13,56,000
Income from operations			$4,62,000

4.

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 12,000 units.

4.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows loss from operation at ($144,000).

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 12,000 units($)

Sales	200.00		$2,400,000
Variable costs
Direct materials	65.00		$780,000
Direct labour	15.00		$180,000
Machinery repairs	4.00		$48,000
Packaging	5.00		$60,000
Utilities	3.00		$36,000
Shipping	7.00		$84,000
Total variable costs	99.00		$1,188,000
Contribution margin	101.00		$1,212,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$1,356,000
Loss from operations			($144,000)

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Answer 2

Question

Chapter 23, Problem 1APSA

To determine

Classification of items into fixed or variable:

A fixed or static budget is a budget that do not tend to change with changes in volume or production while flexible budget is a budget that tends to change with change in volume or production.

Classification of items into fixed or variable cost and to determine their per unit amount or annual amount, as the case may be.

Expert Solution

Explanation of Solution

Company P Fixed Budget Report For Year Ended December, 31
Particulars	Cost classification	Variable costper unit	Total variable cost($)	Fixed cost($)
Sales	Variable	200	3,000,000	-
Cost of good sold
Direct materials	Variable	65	975,000	-
Direct labour	Variable	15	225,000	-
Machinery repairs	Variable	4	60,000	-
Depreciation	Fixed	-	-	300,000
Utilities	Variable	3	45,000	150,000
Plant management salaries	Fixed	-	-	200,000
Selling expense
Packaging	Variable	5	75,000	-
Shipping	Variable	7	105,000	-
Sales salary	Fixed	-	-	250,000
General and administrative expense
Advertising expense	Fixed	-	-	125,000
Salaries	Fixed	-	-	241,000
Entertainment expense	Fixed	-	-	90,000
Total cost			1,485,000	1,356,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Expert Solution

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for
			14,000 units	16,000 units
Sales	200.00		2,800,000	3,200,000
Variable costs
Direct materials	65.00		910,000	1,040,000
Direct labour	15.00		210,000	240,000
Machinery repairs	4.00		56,000	64,000
Packaging	5.00		70,000	80,000
Utilities	3.00		42,000	48,000
Shipping	7.00		98,000	112,000
Total variable costs	99.00		1,386,000	1,584,000
Contribution margin	101.00		1,414,000	1,616,000
Fixed costs
Depreciation		300,000	300,000	300,000
Utilities		150,000	150,000	150,000
Plant management salaries		200,000	200,000	200,000
Sales salary	-	250,000	250,000	250,000
Advertising expense	-	125,000	125,000	125,000
Salaries	-	241,000	241,000	241,000
Entertainment expense	-	90,000	90,000	90,000
Total fixed cost			1,356,000	1,356,000
Income from operations			58,000	260,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 18,000 units.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows income from operation at $462,000.

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 18,000 units

Sales	200.00		$36,00,000
Variable costs
Direct materials	65.00		$11,70,000
Direct labour	15.00		$2,70,000
Machinery repairs	4.00		$72,000
Packaging	5.00		$90,000
Utilities	3.00		$54,000
Shipping	7.00		$126,000
Total variable costs	99.00		$1,782,000
Contribution margin	101.00		$1,818,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$13,56,000
Income from operations			$4,62,000

4.

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 12,000 units.

4.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows loss from operation at ($144,000).

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 12,000 units($)

Sales	200.00		$2,400,000
Variable costs
Direct materials	65.00		$780,000
Direct labour	15.00		$180,000
Machinery repairs	4.00		$48,000
Packaging	5.00		$60,000
Utilities	3.00		$36,000
Shipping	7.00		$84,000
Total variable costs	99.00		$1,188,000
Contribution margin	101.00		$1,212,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$1,356,000
Loss from operations			($144,000)

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Answer 3

Question

Chapter 23, Problem 1APSA

To determine

Classification of items into fixed or variable:

A fixed or static budget is a budget that do not tend to change with changes in volume or production while flexible budget is a budget that tends to change with change in volume or production.

Classification of items into fixed or variable cost and to determine their per unit amount or annual amount, as the case may be.

Expert Solution

Explanation of Solution

Company P Fixed Budget Report For Year Ended December, 31
Particulars	Cost classification	Variable costper unit	Total variable cost($)	Fixed cost($)
Sales	Variable	200	3,000,000	-
Cost of good sold
Direct materials	Variable	65	975,000	-
Direct labour	Variable	15	225,000	-
Machinery repairs	Variable	4	60,000	-
Depreciation	Fixed	-	-	300,000
Utilities	Variable	3	45,000	150,000
Plant management salaries	Fixed	-	-	200,000
Selling expense
Packaging	Variable	5	75,000	-
Shipping	Variable	7	105,000	-
Sales salary	Fixed	-	-	250,000
General and administrative expense
Advertising expense	Fixed	-	-	125,000
Salaries	Fixed	-	-	241,000
Entertainment expense	Fixed	-	-	90,000
Total cost			1,485,000	1,356,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Expert Solution

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for
			14,000 units	16,000 units
Sales	200.00		2,800,000	3,200,000
Variable costs
Direct materials	65.00		910,000	1,040,000
Direct labour	15.00		210,000	240,000
Machinery repairs	4.00		56,000	64,000
Packaging	5.00		70,000	80,000
Utilities	3.00		42,000	48,000
Shipping	7.00		98,000	112,000
Total variable costs	99.00		1,386,000	1,584,000
Contribution margin	101.00		1,414,000	1,616,000
Fixed costs
Depreciation		300,000	300,000	300,000
Utilities		150,000	150,000	150,000
Plant management salaries		200,000	200,000	200,000
Sales salary	-	250,000	250,000	250,000
Advertising expense	-	125,000	125,000	125,000
Salaries	-	241,000	241,000	241,000
Entertainment expense	-	90,000	90,000	90,000
Total fixed cost			1,356,000	1,356,000
Income from operations			58,000	260,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 18,000 units.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows income from operation at $462,000.

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 18,000 units

Sales	200.00		$36,00,000
Variable costs
Direct materials	65.00		$11,70,000
Direct labour	15.00		$2,70,000
Machinery repairs	4.00		$72,000
Packaging	5.00		$90,000
Utilities	3.00		$54,000
Shipping	7.00		$126,000
Total variable costs	99.00		$1,782,000
Contribution margin	101.00		$1,818,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$13,56,000
Income from operations			$4,62,000

4.

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 12,000 units.

4.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows loss from operation at ($144,000).

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 12,000 units($)

Sales	200.00		$2,400,000
Variable costs
Direct materials	65.00		$780,000
Direct labour	15.00		$180,000
Machinery repairs	4.00		$48,000
Packaging	5.00		$60,000
Utilities	3.00		$36,000
Shipping	7.00		$84,000
Total variable costs	99.00		$1,188,000
Contribution margin	101.00		$1,212,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$1,356,000
Loss from operations			($144,000)

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Answer 4

Question

Chapter 23, Problem 1APSA

To determine

Classification of items into fixed or variable:

A fixed or static budget is a budget that do not tend to change with changes in volume or production while flexible budget is a budget that tends to change with change in volume or production.

Classification of items into fixed or variable cost and to determine their per unit amount or annual amount, as the case may be.

Expert Solution

Explanation of Solution

Company P Fixed Budget Report For Year Ended December, 31
Particulars	Cost classification	Variable costper unit	Total variable cost($)	Fixed cost($)
Sales	Variable	200	3,000,000	-
Cost of good sold
Direct materials	Variable	65	975,000	-
Direct labour	Variable	15	225,000	-
Machinery repairs	Variable	4	60,000	-
Depreciation	Fixed	-	-	300,000
Utilities	Variable	3	45,000	150,000
Plant management salaries	Fixed	-	-	200,000
Selling expense
Packaging	Variable	5	75,000	-
Shipping	Variable	7	105,000	-
Sales salary	Fixed	-	-	250,000
General and administrative expense
Advertising expense	Fixed	-	-	125,000
Salaries	Fixed	-	-	241,000
Entertainment expense	Fixed	-	-	90,000
Total cost			1,485,000	1,356,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Expert Solution

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for
			14,000 units	16,000 units
Sales	200.00		2,800,000	3,200,000
Variable costs
Direct materials	65.00		910,000	1,040,000
Direct labour	15.00		210,000	240,000
Machinery repairs	4.00		56,000	64,000
Packaging	5.00		70,000	80,000
Utilities	3.00		42,000	48,000
Shipping	7.00		98,000	112,000
Total variable costs	99.00		1,386,000	1,584,000
Contribution margin	101.00		1,414,000	1,616,000
Fixed costs
Depreciation		300,000	300,000	300,000
Utilities		150,000	150,000	150,000
Plant management salaries		200,000	200,000	200,000
Sales salary	-	250,000	250,000	250,000
Advertising expense	-	125,000	125,000	125,000
Salaries	-	241,000	241,000	241,000
Entertainment expense	-	90,000	90,000	90,000
Total fixed cost			1,356,000	1,356,000
Income from operations			58,000	260,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 18,000 units.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows income from operation at $462,000.

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 18,000 units

Sales	200.00		$36,00,000
Variable costs
Direct materials	65.00		$11,70,000
Direct labour	15.00		$2,70,000
Machinery repairs	4.00		$72,000
Packaging	5.00		$90,000
Utilities	3.00		$54,000
Shipping	7.00		$126,000
Total variable costs	99.00		$1,782,000
Contribution margin	101.00		$1,818,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$13,56,000
Income from operations			$4,62,000

4.

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 12,000 units.

4.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows loss from operation at ($144,000).

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 12,000 units($)

Sales	200.00		$2,400,000
Variable costs
Direct materials	65.00		$780,000
Direct labour	15.00		$180,000
Machinery repairs	4.00		$48,000
Packaging	5.00		$60,000
Utilities	3.00		$36,000
Shipping	7.00		$84,000
Total variable costs	99.00		$1,188,000
Contribution margin	101.00		$1,212,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$1,356,000
Loss from operations			($144,000)

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Answer 5

Chapter 23, Problem 1APSA

To determine

Classification of items into fixed or variable:

A fixed or static budget is a budget that do not tend to change with changes in volume or production while flexible budget is a budget that tends to change with change in volume or production.

Classification of items into fixed or variable cost and to determine their per unit amount or annual amount, as the case may be.

Expert Solution

Explanation of Solution

Company P Fixed Budget Report For Year Ended December, 31
Particulars	Cost classification	Variable costper unit	Total variable cost($)	Fixed cost($)
Sales	Variable	200	3,000,000	-
Cost of good sold
Direct materials	Variable	65	975,000	-
Direct labour	Variable	15	225,000	-
Machinery repairs	Variable	4	60,000	-
Depreciation	Fixed	-	-	300,000
Utilities	Variable	3	45,000	150,000
Plant management salaries	Fixed	-	-	200,000
Selling expense
Packaging	Variable	5	75,000	-
Shipping	Variable	7	105,000	-
Sales salary	Fixed	-	-	250,000
General and administrative expense
Advertising expense	Fixed	-	-	125,000
Salaries	Fixed	-	-	241,000
Entertainment expense	Fixed	-	-	90,000
Total cost			1,485,000	1,356,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Expert Solution

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for
			14,000 units	16,000 units
Sales	200.00		2,800,000	3,200,000
Variable costs
Direct materials	65.00		910,000	1,040,000
Direct labour	15.00		210,000	240,000
Machinery repairs	4.00		56,000	64,000
Packaging	5.00		70,000	80,000
Utilities	3.00		42,000	48,000
Shipping	7.00		98,000	112,000
Total variable costs	99.00		1,386,000	1,584,000
Contribution margin	101.00		1,414,000	1,616,000
Fixed costs
Depreciation		300,000	300,000	300,000
Utilities		150,000	150,000	150,000
Plant management salaries		200,000	200,000	200,000
Sales salary	-	250,000	250,000	250,000
Advertising expense	-	125,000	125,000	125,000
Salaries	-	241,000	241,000	241,000
Entertainment expense	-	90,000	90,000	90,000
Total fixed cost			1,356,000	1,356,000
Income from operations			58,000	260,000

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 18,000 units.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows income from operation at $462,000.

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 18,000 units

Sales	200.00		$36,00,000
Variable costs
Direct materials	65.00		$11,70,000
Direct labour	15.00		$2,70,000
Machinery repairs	4.00		$72,000
Packaging	5.00		$90,000
Utilities	3.00		$54,000
Shipping	7.00		$126,000
Total variable costs	99.00		$1,782,000
Contribution margin	101.00		$1,818,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$13,56,000
Income from operations			$4,62,000

4.

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 12,000 units.

4.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows loss from operation at ($144,000).

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 12,000 units($)

Sales	200.00		$2,400,000
Variable costs
Direct materials	65.00		$780,000
Direct labour	15.00		$180,000
Machinery repairs	4.00		$48,000
Packaging	5.00		$60,000
Utilities	3.00		$36,000
Shipping	7.00		$84,000
Total variable costs	99.00		$1,188,000
Contribution margin	101.00		$1,212,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$1,356,000
Loss from operations			($144,000)

Answer 6

Chapter 23, Problem 1APSA

To determine

Classification of items into fixed or variable:

A fixed or static budget is a budget that do not tend to change with changes in volume or production while flexible budget is a budget that tends to change with change in volume or production.

Classification of items into fixed or variable cost and to determine their per unit amount or annual amount, as the case may be.

Expert Solution

Explanation of Solution

Company P Fixed Budget Report For Year Ended December, 31
Particulars	Cost classification	Variable costper unit	Total variable cost($)	Fixed cost($)
Sales	Variable	200	3,000,000	-
Cost of good sold
Direct materials	Variable	65	975,000	-
Direct labour	Variable	15	225,000	-
Machinery repairs	Variable	4	60,000	-
Depreciation	Fixed	-	-	300,000
Utilities	Variable	3	45,000	150,000
Plant management salaries	Fixed	-	-	200,000
Selling expense
Packaging	Variable	5	75,000	-
Shipping	Variable	7	105,000	-
Sales salary	Fixed	-	-	250,000
General and administrative expense
Advertising expense	Fixed	-	-	125,000
Salaries	Fixed	-	-	241,000
Entertainment expense	Fixed	-	-	90,000
Total cost			1,485,000	1,356,000

Answer 7

Chapter 23, Problem 1APSA

To determine

Classification of items into fixed or variable:

A fixed or static budget is a budget that do not tend to change with changes in volume or production while flexible budget is a budget that tends to change with change in volume or production.

Classification of items into fixed or variable cost and to determine their per unit amount or annual amount, as the case may be.

Answer 8

Expert Solution

Explanation of Solution

Company P Fixed Budget Report For Year Ended December, 31
Particulars	Cost classification	Variable costper unit	Total variable cost($)	Fixed cost($)
Sales	Variable	200	3,000,000	-
Cost of good sold
Direct materials	Variable	65	975,000	-
Direct labour	Variable	15	225,000	-
Machinery repairs	Variable	4	60,000	-
Depreciation	Fixed	-	-	300,000
Utilities	Variable	3	45,000	150,000
Plant management salaries	Fixed	-	-	200,000
Selling expense
Packaging	Variable	5	75,000	-
Shipping	Variable	7	105,000	-
Sales salary	Fixed	-	-	250,000
General and administrative expense
Advertising expense	Fixed	-	-	125,000
Salaries	Fixed	-	-	241,000
Entertainment expense	Fixed	-	-	90,000
Total cost			1,485,000	1,356,000

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Expert Solution

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for
			14,000 units	16,000 units
Sales	200.00		2,800,000	3,200,000
Variable costs
Direct materials	65.00		910,000	1,040,000
Direct labour	15.00		210,000	240,000
Machinery repairs	4.00		56,000	64,000
Packaging	5.00		70,000	80,000
Utilities	3.00		42,000	48,000
Shipping	7.00		98,000	112,000
Total variable costs	99.00		1,386,000	1,584,000
Contribution margin	101.00		1,414,000	1,616,000
Fixed costs
Depreciation		300,000	300,000	300,000
Utilities		150,000	150,000	150,000
Plant management salaries		200,000	200,000	200,000
Sales salary	-	250,000	250,000	250,000
Advertising expense	-	125,000	125,000	125,000
Salaries	-	241,000	241,000	241,000
Entertainment expense	-	90,000	90,000	90,000
Total fixed cost			1,356,000	1,356,000
Income from operations			58,000	260,000

Answer 13

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Answer 14

Expert Solution

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for
			14,000 units	16,000 units
Sales	200.00		2,800,000	3,200,000
Variable costs
Direct materials	65.00		910,000	1,040,000
Direct labour	15.00		210,000	240,000
Machinery repairs	4.00		56,000	64,000
Packaging	5.00		70,000	80,000
Utilities	3.00		42,000	48,000
Shipping	7.00		98,000	112,000
Total variable costs	99.00		1,386,000	1,584,000
Contribution margin	101.00		1,414,000	1,616,000
Fixed costs
Depreciation		300,000	300,000	300,000
Utilities		150,000	150,000	150,000
Plant management salaries		200,000	200,000	200,000
Sales salary	-	250,000	250,000	250,000
Advertising expense	-	125,000	125,000	125,000
Salaries	-	241,000	241,000	241,000
Entertainment expense	-	90,000	90,000	90,000
Total fixed cost			1,356,000	1,356,000
Income from operations			58,000	260,000

Answer 15

Expert Solution

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 18,000 units.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows income from operation at $462,000.

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 18,000 units

Sales	200.00		$36,00,000
Variable costs
Direct materials	65.00		$11,70,000
Direct labour	15.00		$2,70,000
Machinery repairs	4.00		$72,000
Packaging	5.00		$90,000
Utilities	3.00		$54,000
Shipping	7.00		$126,000
Total variable costs	99.00		$1,782,000
Contribution margin	101.00		$1,818,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$13,56,000
Income from operations			$4,62,000

Answer 19

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 18,000 units.

Answer 20

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows income from operation at $462,000.

Answer 21

Expert Solution

Answer 22

Expert Solution

Answer 23

Expert Solution

Answer 24

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 18,000 units

Sales	200.00		$36,00,000
Variable costs
Direct materials	65.00		$11,70,000
Direct labour	15.00		$2,70,000
Machinery repairs	4.00		$72,000
Packaging	5.00		$90,000
Utilities	3.00		$54,000
Shipping	7.00		$126,000
Total variable costs	99.00		$1,782,000
Contribution margin	101.00		$1,818,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$13,56,000
Income from operations			$4,62,000

Answer 25

4.

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 12,000 units.

4.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows loss from operation at ($144,000).

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 12,000 units($)

Sales	200.00		$2,400,000
Variable costs
Direct materials	65.00		$780,000
Direct labour	15.00		$180,000
Machinery repairs	4.00		$48,000
Packaging	5.00		$60,000
Utilities	3.00		$36,000
Shipping	7.00		$84,000
Total variable costs	99.00		$1,188,000
Contribution margin	101.00		$1,212,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$1,356,000
Loss from operations			($144,000)

Answer 26

4.

To determine

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 12,000 units.

Answer 27

4.

Expert Solution

Answer to Problem 1APSA

The flexible budget of Company P for the year ended March, 31 shows loss from operation at ($144,000).

Answer 28

4.

Expert Solution

Answer 29

4.

Expert Solution

Answer 30

Expert Solution

Answer 31

Explanation of Solution

Company P Flexible Budget Report For Year Ended December, 31
Particulars	Variable cost per unit	Total fixed cost	Flexible budget for 12,000 units($)

Sales	200.00		$2,400,000
Variable costs
Direct materials	65.00		$780,000
Direct labour	15.00		$180,000
Machinery repairs	4.00		$48,000
Packaging	5.00		$60,000
Utilities	3.00		$36,000
Shipping	7.00		$84,000
Total variable costs	99.00		$1,188,000
Contribution margin	101.00		$1,212,000
Fixed costs
Depreciation		$300,000	$300,000
Utilities		$150,000	$150,000
Plant management salaries		$200,000	$200,000
Sales salary	-	$250,000	$250,000
Advertising expense	-	$125,000	$125,000
Salaries	-	$241,000	$241,000
Entertainment expense	-	$90,000	$90,000
Total fixed cost			$1,356,000
Loss from operations			($144,000)

Answer 32

Ch. 23 - Prob. 1DQ Ch. 23 - Prob. 2DQ Ch. 23 - Prob. 3DQ Ch. 23 - Prob. 4DQ Ch. 23 - Prob. 5DQ Ch. 23 - Prob. 6DQ Ch. 23 - Prob. 7DQ Ch. 23 - Prob. 8DQ Ch. 23 - Prob. 9DQ Ch. 23 - Prob. 10DQ

Concept explainers

Videos

Explanation of Solution

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Explanation of Solution

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 18,000 units.

Answer to Problem 1APSA

Explanation of Solution

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 12,000 units.

Answer to Problem 1APSA

Explanation of Solution

Want to see more full solutions like this?

Chapter 23 Solutions

Concept explainers

Videos

Explanation of Solution

Flexible budget: A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity. Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Explanation of Solution

Flexible budget: A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity. Preparation of flexible budget at sales volume of 18,000 units.

Answer to Problem 1APSA

Explanation of Solution

Flexible budget: A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity. Preparation of flexible budget at sales volume of 12,000 units.

Answer to Problem 1APSA

Explanation of Solution

Want to see more full solutions like this?

Chapter 23 Solutions

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 14,000 and 16,000 units.

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 18,000 units.

Flexible budget:

A flexible budget is a budget that tends to change with change in volume or production. Flexible budget is more useful than fixed budget as it reflects the cost in proportionate to the level of activity.

Preparation of flexible budget at sales volume of 12,000 units.