Question

Data-2-Go manufactures and sells flash drives. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:

	Actual (based on actual of 425,000 units)			Master Budget (based on budgeted 400,000 units)
Sales revenue	$	2,995,000		$	3,400,000
Less
Variable costs
Blank flash drives		950,000			1,000,000
Direct labor		247,500			200,000
Variable overhead		363,500			400,000
Variable marketing and administrative		305,000			280,000
Total variable costs	$	1,866,000		$	1,880,000
Contribution margin	$	1,129,000		$	1,520,000
Less
Fixed costs
Manufacturing overhead		581,000			550,000
Marketing		185,000			185,000
Administrative		97,000			115,000
Total fixed costs	$	863,000		$	850,000
Operating profits	$	266,000		$	670,000

Required:

Prepare a flexible budget for Data-2-Go. (Input all amounts as positive values. Do not round your intermediate calculations. Round your answers to the nearest dollar amount. Omit the "$" sign in your response.)

	Flexible budget (based on actual of 425,000 units)
Sales revenue	$
Variable costs:
Blank drives
Direct labor
Variable overhead
Variable marketing and administrative
Total variable costs	$
Contribution margin	$
Fixed costs:
Manufacturing overhead
Marketing
Administrative
Total fixed costs	$
Operating profits	$

Answer 1

	Master Budget				Flexible budget
	(based on budgeted
	400,000 units)			Per unit	425,000 units
Sales revenue	$	3,400,000		$      8.50	$ 3,612,500.00
Less
Variable costs
Blank flash drives		1,000,000		$      2.50	$ 1,062,500.00
Direct labor		200,000		$      0.50	$     212,500.00
Variable overhead		400,000		$      1.00	$     425,000.00
Variable marketing and administrative		280,000		$      0.70	$     297,500.00
Total variable costs	$	1,880,000			$ 1,997,500.00
Contribution margin	$	1,520,000			$ 1,615,000.00
Less
Fixed costs
Manufacturing overhead		550,000			550,000
Marketing		185,000			185,000
Administrative		115,000			115,000
Total fixed costs	$	850,000			850,000
Operating profits	$	670,000			$     765,000.00