Odessa Inc., reports the following information concerning operations for the mos

Question

Odessa Inc., reports the following information concerning operations for the most aster Budget (based on budgeted Actual (based on actual of 585 units) $96,330 650 units) Sales revenue ess $104,000 Manufacturing costs Direct labor Materials 14,192 12,635 8,640 5,568 5,200 $46,235 $50,095 14,950 14,625 10,400 6,240 5,200 $ 51,415 $ 52,585 Variable overhead Marketing Administrative Total variable costs Contribution margin Fixed costs 4,550 10,088 9,155 $23,793 $26,302 Manufacturing 4,700 9,700 9 200 23,600 $ 28,985 Marketing Administrative Total fixed costs Operating profits ere are no inventories

Explanation / Answer

The main idea behind flexible budget is to flex the budget into actual volume of activity . It enables a like with like comparison.

-the formula used here is , firstly we find budgeted revenue or cost per budgeted unit

( ie ,cost pet unit = bugeted cost/budgeted unit)

then we will change in terms of actual units by multiplying with 585 units.

"if you have any doubt please feel free to contact us , we are happy to treat you - chegg expert "

       Flexible budget                          $ sales revenue (104,000/650*585) 93,600 variable cost :-      manufacturing cost ;          direct labour (14950*585/650) 13,455           materials (14625*585/650) 13,162.50           variable overhead (10400*585/650) 9,360            marketing (6240*585/650) 5,616           administrative (5200*585/650) 4,680      total variable cost            (46,274) contribution margin 47,326.50     fixed cost :-              manufacturing (4700*585/650) 4,230              marketing (9700*585/650) 8,730              administrative (9200*585/650) 8,280       Total Fixed Cost            (21,240) Operating Profit 26,086.50

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