Asked by Sophia Michelle on Jun 04, 2024
Verified
Clevenger Co.planned to produce and sell 30,000 units with a selling price of $10 per unit.Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000.Clevenger actually produced and sold 37,000 units.
Using a contribution margin format:
Prepare a fixed budget income statement for the planned level of sales and production.
Contribution Margin
The difference between sales revenue and variable costs, showing how much revenue contributes to covering fixed costs.
Fixed Budget
A budget that remains constant regardless of changes in the level of activity or volume, typically used for planning purposes.
Variable Costs
Outlays that fluctuate according to the amount of production or volume of sales.
- Acknowledge the deployment and preparation of flexible budgets within different frameworks.
- Investigate the ramifications of advantageous and disadvantageous variances on financial outcomes.
- Clarify how flexible budgets contribute to performance analysis.
Verified Answer
KN
Learning Objectives
- Acknowledge the deployment and preparation of flexible budgets within different frameworks.
- Investigate the ramifications of advantageous and disadvantageous variances on financial outcomes.
- Clarify how flexible budgets contribute to performance analysis.