Preparing flexible budgets (adapted from CPA exam). Exhibit 9.21 provides inform
ID: 2476362 • Letter: P
Question
Preparing flexible budgets (adapted from CPA exam). Exhibit 9.21 provides information (totals) concerning the operations of the Maxum Company for the current period. The firm has no inventories. Prepare a flexible budget for the company
Exhibit 9.21:
MAXUM COMPANY
Actual Master Budget
Sales Volume......................................... 170 Units 200 Units
Sales Revenue........................................ $18,400 $20.000
Manufacturing Cost of Goods Sold:
Variable........................................... 6,880 7,800
fixed............................................. 485 500
Cost of Goods Sold................................. $ 7365 $ 8300
Gross Profit $11035 $11700
Operating Costs:
Marketing Costs:
Variable..................................... ... 2060 2200
Fixed........................................... 1040 1000
Administrating Costs. All fixed................. 995 1000
Total Operating Costs............................. 4095 4200
Operating Profits...................................... 6940 7500
Prepare a flexible budget for the company
Explanation / Answer
Flexible Budget Particulars Flexible budget at 170 units Sales Volume 170 Sales Revenue 17,000 Manufacturing Cost of goods sold: Variable 6630 Fixed 500 Cost of goods sold 7130 Gross profit 9,870 Operating Cost: Marketing Costs: Variable 1870 Fixed 1000 Administrative Cost : Fixed 1000 Total Operating Cost 3870 Operating Profit 6,000