Question

The actual information pertains to the month of June. As a part of the budgeting​ process, Great Cabinets Company developed the following static budget for June. Great Cabinets is in the process of preparing the flexible budget and understanding the results. ActualResults FlexibleBudget StaticBudget Sales volume​ (in units) 12,000 ​ ________ 16,000 Sales revenues $600,000 ​$ $800,000 Variable costs 240,000 ​$ ________ 322,240 Contribution margin ​$360,000 ​$ ​$477,760 Fixed costs 275,100 ​$ ________ 269,700 Operating profit $84,900 ​$ ________ $208,060 The flexible budget will report​ ________ for variable costs.

Answer 1

Answer:

The flexible budget will report​  $ 320,000 for variable costs.

Explanation:

Great Cabinets Company

                                  Actual Results    Flexible Budget    Static   Budget

Sales volume​ (in units) 12,000                 ​ ________            16,000

Sales revenues          $600,000 ​             $                         $ 800,000

Variable costs          240,000 ​           $ ________                 322,240

Contribution margin ​$360,000 ​         $ ​                                 $477,760

Fixed costs             275,100                ​$ ________              269,700

Operating profit      $84,900             ​$ ________              $208,060

The flexible budget will report​ ________ $ 320,000 for variable costs.

For 16000 units the Flexible Budget would be

Sales Revenue           ($600,000 /12000)16000 =$ 800,000

Variable Costs           (240,000 /12000)16000 =  $ 320,000

Contribution Margin        $ 480,000                                    

Fixed Costs                          275,100  ( assuming fixed costs to be same

                                                                        for 16000 units)

Operating Profit                  204,900