Douglas Company provided the following budgeted information for the current year

Question

Douglas Company provided the following budgeted information for the current year.



Required:
(a) Using the form below, prepare a flexible budget; show actual results; calculate the flexible budget variances; and indicate whether the variances are favorable (F) or unfavorable (U).
sales price    $50 per unit
variable manufacturing cost.   32 per unit
fixed manufacturing cost   $100,000 total
fixed selling and administrative cost $40,000 total



Flexible BudgetActual ResultsFlexible Budget F or u
      22,000.                  22,000

Number of units
Sales revenue
Variable manufacturing costs
Contribution margin
Fixed manufacturing costs
Fixed selling and administrative costs
Net Income

Explanation / Answer

Prepare Flexible budget:

Flexible budget No of units 22000 Sales revenue 1100000 Variable manufacturing cost (704000) Contribution margin 396000 Fixed manufacturing costs (100000) Fixed selling and administrative costs (40000) Net income 256000

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