Question

Part 1 of 2 Required Information The following information applies to the questions displayed below) Brodrick Company expects to produce 20.900 units for the year ending December 31. A flexible budget for 20,900 units of production reflects sales of $480.700; variable costs of $62,700, and fixed costs of $140,000 -oints If the company instead expects to produce and sell 26,200 units for the year, calculate the expected level of income from operations Book ang TE Tudotal Total Fixer 20.000 units 26,200 units A Dot s Variable cost Contribution margin Fored costs income from operations

Answer 1

Solution:-

	Flexible Budget	Flexible Budget AT
	Variable amount per unit	Total fixed cost	20,900 units	26,200 units
Sales	23		480,700	602,600
Less:- Variable cost	3		-62,700	-78,600
Contribution margin	20		420,000	524,000
Less :- Fixed cost		1,40,000	140,000	140,000
Income from operations			280,000	384,000

Therefore, the expected level of income from operations for 20,900 units is $280,000 and for 26,200 units is $384,000.

Calculate sales per unit and variable cost per unit:-

Sales per unit = Total Sales / Number of units produced

                           = 480,700 / 20,900

                           = 23 units

Variable cost per unit = Variable Cost / Number of units produced

                                           = 62,700 / 20,900

                                           = 3