A company makes and sells a single product. The company employs a flexible budgeting system that covers a relevant range from 25,000 units to 30,000 units. Budget data for April, based on 27,000 units are as follows:
Prime costs | $35 per unit |
Manufacturing overhead | $137,000 plus $4 per unit |
Selling and admin expenses | $35,000 plus $3 per unit |
Selling price | $75 per unit |
There was no beginning nor ending inventory. Actual sales were 30,000 units. What is the company's flexible budget operating income (loss) for April?
a) 463,000
b) 550,000
c) 719,000
d) 818,000
e) none of the above
Sales ($75/unit * 30,000) = $2,250,000
Computation of Total Costs
Prime Costs ($35 * 30,000) = ($1,050,000)
Manufacturing Overhead [$137,000 + ($4 * 30,000)] = ($257,000)
Selling & Admin Expenses [$35,000 + ($3 *30,000)] = ($125,000)
Total Costs = ($1,432,000)
Operating Income = $2,250,000 - $1,432,000
Operating Income = $818,000
A company makes and sells a single product. The company employs a flexible budgeting system that...
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