Mesa Company’s fixed budget for the first quarter of calendar year 2011 reveals the following. Prepare flexible budgets following the format of Exhibit 24.3 that show variable costs per unit, fixed costs, and three different flexible budgets for sales volumes of 7,500, 10,000, and 12,500 units.
|
Sales (10,000 units) |
|
$3,000,000 |
|
Cost of goods sold |
|
|
|
Direct materials |
$320,000 |
|
|
Direct labor |
680,000 |
|
|
Production supplies |
264,000 |
|
|
Plant manager salary |
60,000 |
1,324,000 |
|
Gross profit |
|
1,676,000 |
|
Selling expenses |
|
|
|
Sales commissions |
120,000 |
|
|
Packaging |
210,000 |
|
|
Advertising |
100,000 |
430,000 |
|
Administrative expenses |
|
|
|
Administrative salaries |
80,000 |
|
|
Depreciation—office equip |
30,000 |
|
|
Insurance |
18,000 |
|
|
Office rent |
24,000 |
152,000 |
|
Income from operations |
|
$1,094,000 |