Secure ps/newconnect mheduc Help Save &Exit; Submt h 23 Homework for the 70,000-

ID: 2404815 • Letter: S

Question

Secure ps/newconnect mheduc Help Save &Exit; Submt h 23 Homework for the 70,000-unit and the 80,000-unit levels of activity shown as follows Complete Outdoor Oustimers has created a flexible budges Outdoor Outfitters's fiexible budget at the 95,000-unit level of activity expenses vary directly with sales and that income taxes remain at 30 percent of operating income Assume that the cost of goods sold and variable operating 7% Cost of goods soid oprofton 70.000 190.000 30,000 Operating income 133,000 Type here to search

Explanation / Answer

70000 units

80000 units

95000 units

Sales

$1400000

$1600000

=95000*20 (sales value per unit)

$1900000

Less: Cost of goods sold

$840000

$960000

= 1900000*0.6[cost of goods sold to sales]

$1140000

Gross profit on sales

$560000

$640000

=1900000-1140000

$760000

Less: Operating expenses ($90000 fixed)

$370000

$410000

=1900000*0.2(variable) +90000 (fixed)

$470000

Operating income

$190000

$230000

=760000-470000

$290000

Less: Income taxes@30% of operating income

$57000

$69000

=290000*0.3

$87000

Net Income

$133000

$161000

=290000-87000

$203000

Sales value per unit = 1400000/70000 = $20 or 1600000/80000 = $20

Cost of goods sold to sales = 840000/1400000=0.6 or 960000/1600000 = 0.6

Operating expense:

Fixed = 90000

Variable = 370000-90000 = 280000 or 410000-90000 = 320000

Variable operating expense to sales = 280000/1400000 = 0.2 or 320000/1600000 = 0.2