Question 9 (of 15) 9. Brodrick Company expects to produce 21,100 units for the y

ID: 2585268 • Letter: Q

Question

Question 9 (of 15) 9. Brodrick Company expects to produce 21,100 units for the year ending December 31. A flexible budget for 21,100 units of production reflects sales of $590,800, variable costs of $63,300, and fixed costs of $130,000 If the company instead expects to produce and sell 27,800 units for the year, calculate the expected level of income from operations Flexible Budget lexible Budget at Variable Amount per Total Fixed Cost 21.100 units 27,800 units S 778,400 Sales Variable cost Contribution margin xed costs ncome from operations 28 00 3.00 25.00 83 S 527,500$ 695,000 S 130000130000 130,000 397,500 $ 565,000 Type here to search ProDisplay P202 19 Bac

Explanation / Answer

With the given data of flexible budget at 21,100 units, compute the sales price and variable costs per unit

Sales price per unit = 590,800/21,100 = 28 per unit

Variable cost per unit = 63,300/21,100 = 3 per unit

Calculation of income from operations at the production level of 27,800 units

particulars

amount

sales (27,800units*28 per unit)

$778,400

variable cost (27,800*3)

$83,400

contribution margin(sales-variable cost)

$695,000

fixed costs (unchanged)

($130,000)

Income from operations(contibution-fixedcost)

$565,000