Prepare Flexible Budget
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 750,000 units) |
Master Budget (based on budgeted 800,000 units) |
|
|
||
|
|
||
|
Sales revenue |
$6,210,000 |
$6,000,000 |
|
Less |
|
|
|
Variable costs |
|
|
|
Blank flash drives |
1,800,000 |
1,800,000 |
|
Direct labor |
345,000 |
420,000 |
|
Variable overhead |
843,000 |
780,000 |
|
Variable marketing and administrative |
585,000 |
600,000 |
|
Total variable costs |
$3,573,000 |
$3,600,000 |
|
Contribution margin |
$2,637,000 |
$2,400,000 |
|
Less |
|
|
|
Fixed costs |
|
|
|
Manufacturing overhead |
1,236,000 |
1,200,000 |
|
Marketing |
360,000 |
360,000 |
|
Administrative |
255,000 |
225,000 |
|
Total fixed costs |
$1,851,000 |
$1,785,000 |
|
Operating profits |
$ 786,000 |
$ 615,000 |
Required
Prepare a flexible budget for Data 2 Go.