Exercise 6-1 Sheffield Sports sells volleyball kits that it purchases from a spo
ID: 2539129 • Letter: E
Question
Exercise 6-1 Sheffield Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 2,000 kits was prepared for the year. Fixed operating expenses account for 80% of total operating expenses at this level of sales. Sales Revenue $ 100,280 Cost of goods sold (all variable) 60,100 Gross margin 40,180 Operating expenses 35,170 Operating income $ 5,010 Prepare a flexible budget based on sales of 1,494, 2,690, and 3,870 units. (Round unit values to 2 decimal places e.g. 15.25 and all other answers to 0 decimal places, e.g. 145. If operating income is negative, enter amounts using a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Explanation / Answer
Answer
Units (A)
Amount (B) -$
per unit (B/A) - $
Sales
2000
100280
$50.14
(-) Cost of Goods Sold
2000
60100
$30.05
Gross Margin
2000
$40180
$20.09
(-) variable operating expense
2000
7034
$3.517
(-) fixed operating expenses
28136
Operating Income
$5010
Units
1494
2690
3870
Sales
74909
134877
194042
(-) Cost of Goods Sold
44895
80835
116294
Gross margin
30014
54042
77748
(-) variable operating expense
5254
9461
13611
(-) fixed operating expenses
28136
28136
28136
Operating Income
$ -3376
$16445
$36002
Units (A)
Amount (B) -$
per unit (B/A) - $
Sales
2000
100280
$50.14
(-) Cost of Goods Sold
2000
60100
$30.05
Gross Margin
2000
$40180
$20.09
(-) variable operating expense
2000
7034
$3.517
(-) fixed operating expenses
28136
Operating Income
$5010