Question

The following is a summarized master budget that Winnipeg Company prepared for January: Sales 9,000 units. Sales revenue $450,000. Less variable costs: Manufacturing $270,000, Selling and administrative $18,000 Total Variable Costs - $288,000. Contribution margin $162,000. Less fixed costs: Manufacturing $72,000, Selling and administrative $27,000 Total fixed costs: $99,000. Operating income $63,000. Actual results for January were as follows: Units produced and sold 8,500 units, Selling price per unit $55.00, Variable costs per unit: Manufacturing $32.00, Selling and administrative $1.50, Total fixed costs $99,000. What were the total flexible budget expenses for January? A) $383,750. B) $371,000. C) $387.000. D) $365,50o.

Answer 1

WORKING NOTES:
	MASTER BUDGET 9000 UNITS
	PARTICULARS	TOTAL	NUMBER OF UNITS	PER UNIT COST
	Sales	$                         4,50,000	$                               9,000	$                          50
	Less: Variable Cost
	Manufacturing variable	$                         2,70,000	$                               9,000	$                          30
	Selling and administrative expenses	$                             18,000	$                               9,000	$                            2
	Contribution Margin	$                         1,62,000
	Less: Fixed Cost	$                             99,000
	Operating income	$                             63,000
SOLUTION :
	Acutal sales is for 8,500 unit it means flexible budget also made for 8,500 units
	CALCULATION OF TOTAL FLEXIBLE BUDGET EXPENSES FOR 8500 UNIT
	PARTICULARS	TOTAL
	Manufacturing variable (8,500 Units X $ 30)	$                         2,55,000
	Selling and administrative expenses (8,500 Units X $ 2)	$                             17,000
	Less: Fixed Cost	$                             99,000
	Total flexible budget expenses	$                         3,71,000
	Answer = Option B = $ 371,000