Asked by Makaylee Wright on Jun 14, 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 flexible budget income statement for the actual level of sales and production.
Contribution Margin
The difference between sales revenue and variable costs, used to cover fixed costs and profit.
Flexible Budget
A budget that adjusts or flexes with changes in volume or activity.
Variable Costs
Costs that vary directly with the level of production or service delivery.
- Comprehend the implementation and formulation of flexible budgets in differing scenarios.
- Evaluate the consequences of favorable and unfavorable discrepancies on revenue.
- Elucidate the role of flexible budgets in evaluating performance.
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Learning Objectives
- Comprehend the implementation and formulation of flexible budgets in differing scenarios.
- Evaluate the consequences of favorable and unfavorable discrepancies on revenue.
- Elucidate the role of flexible budgets in evaluating performance.