Sanchez Corporation manufactures tables for schools. The 2023 operating budget is based on sales of 100,000 units at $500 per table. Budgeted variable costs are $350 per unit, while fixed costs total $6,000,000. For 2023, actual sales were 110,000 units at $490 each. Actual variable costs were $360 per unit and fixed costs totaled $5,800,000. Required: a) Prepare a report showing actual results, a static budget and a flexible budget. b) Explain the significance of a flexible budget versus a static budget.

Sanchez Corporation manufactures tables for schools. The 2023 operating budget is based on sales of 100,000 units at $500 per table. Budgeted variable costs are $350 per unit, while fixed costs total $6,000,000. For 2023, actual sales were 110,000 units at $490 each. Actual variable costs were $360 per unit and fixed costs totaled $5,800,000. Required: a) Prepare a report showing actual results, a static budget and a flexible budget. b) Explain the significance of a flexible budget versus a static budget.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 15EA: Cold X, Inc. uses this information when preparing their flexible budget: direct materials of $2 per...

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Starburst Inc. has the following items and amounts as part of its master budget at the 10,000-unit level of sales and production: Determine the total dollar amounts for the above items that would appear in a flexible budget at the following volume levels, assuming that both levels are within the relevant range: a. 8,000-unit level of sales and production b. 12,000-unit level of sales and production (Hint: You must first determine the unit selling price and certain unit costs.)
Cold X, Inc. uses this information when preparing their flexible budget: direct materials of $2 per unit, direct labor of $3 per unit, and manufacturing overhead of $1 per unit. Fixed costs are $35,000. What would be the budgeted amounts for 20,000 and 25,000 units?
Sanchez Corporation manufactures tables for schools. The 2023 operating budget is based on sales of 100,000 units at $500 per table. Budgeted variable costs are $350 per unit, while fixed costs total $6,000,000. For 2023, actual sales were 110,000 units at $490 each. Actual variable costs were $360 per unit and fixed costs totaled $5,800,000. Required: a) Prepare a report showing actual results, a static budget and a flexible budget.
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