The actual information pertains to the month of June. As a part of the budgeting process, Great Cabinets Company developed the following static budget for June. Great Cabinets is in the process of preparing the flexible budget and understanding the results. Actual Flexible Static Results Budget BudgetSales volume (in units) 18,000 23,000Sales revenues $900,000 $ $1,150,000Variable costs 360,000 $ ________ 463,910Contribution margin 540,000 $ 686,090Fixed costs 275,300 $ ________ 269,500Operating profit $264,700 $ $416,590The flexible budget will report ________ for variable costs. (Round any intermediate calculations to the nearest cent, and round your final answer to the nearest dollar.)

Question

The actual information pertains to the month of June. As a part of the budgeting process, Great Cabinets Company developed the following static budget for June. Great Cabinets is in the process of preparing the flexible budget and understanding the results. Actual Flexible Static Results Budget BudgetSales volume (in units) 18,000 23,000Sales revenues $900,000 $  $1,150,000Variable costs 360,000 $ ________ 463,910Contribution margin 540,000 $  686,090Fixed costs 275,300 $ ________ 269,500Operating profit $264,700 $  $416,590The flexible budget will report ________ for variable costs. (Round any intermediate calculations to the nearest cent, and round your final answer to the nearest dollar.)

BlackTom AI · Accepted Answer

Variable costs vary directly with activity (units), so to put variable costs on the flexible budget you scale the actual-variable-cost amount to the budgeted level of activity. Use the ratio of budgeted units to actual units and apply it to actual variable costs.

Relevant concepts:
- Flexible budgets show what costs should have been at a particular activity level by scaling variable costs proportionally to units.
- Scaling factor = Budgeted (or target) units / Actual units.

Step-by-step calculation (all intermediate steps shown):
1. Actual variable costs = $360,000 (given for 18,000 units).
2. Budgeted (static) units = 23,000; Actual units = 18,000.
3. Scaling factor = 23,000 / 18,000 = 1.2777777777777778.
4. Flexible-budget variable costs = Actual variable costs × Scaling factor
   = $360,000 × 1.2777777777777778
   = $360,000 × (23/18)
   = $360,000 × 23 ÷ 18
   = $8,280,000 ÷ 18
   = $460,000.00
5. Rounded to the nearest dollar: $460,000.

Why this is correct:
- This procedure produces the amount of variable cost that would be expected at the budgeted activity level given the actual variable-cost amount per actual activity (i.e., it scales the observed variable cost by the change in activity). Following the table’s structure (actual results versus budget volumes), scaling the actual variable cost from 18,000 to 23,000 units yields $460,000 for the flexible-budget column.

Why the other choices are incorrect:
- $463,910 is the static-budget variable cost already given for 23,000 units (a precomputed static amount), not the flexible-budget amount derived from scaling actual costs.
- $363,060 would result from using the static per-unit variable cost (463,910/23,000 ≈ $20.17) applied to actual units (18,000). That computes expected variable cost at actual volume using static per-unit rates, which is a different calculation.
- $592,774 does not correspond to any correct scaling or per-unit multiplication in this dataset.

Final confirmation: The flexible budget reports $460,000 for variable costs, matching the provided answer.

类似问题

Which budget evaluates the results of operations at the actual level of activity?

Flexing the budget means

Variable cost per unit and total fixed costs remain constant in the relevant range. Therefore, total fixed costs should not change with the change in activity level and you would take the variable cost per unit times the new activity level to generate the flexible budget line item.

When the activity level of the master/planning/static budget differs from the activity level (cost driver, allocation base; e.g., machine hours), then a flexible budget is needed to match the same activity level that the actuals are based on to truly analyze revenue and spending variances.

Which of the following is TRUE of flexible budget?

The flexible budget for direct materials is computed in which of the following ways?

Laurie Inc.’s static budget for 10,000 units of production includes $60,000 for direct materials, $44,000 for direct labor, fixed utilities costs of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production would show

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