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Use the following information for the Quick Study below. [The following information applies to the questions displayed below.] Brodrick Company expects to produce 20,000 units for the year ending December 31. A flexible budget for 20,000 units of production reflects sales of $400,000; variable costs of $80,000; and fixed costs of $150,000. QS 21-4 Flexible budget performance report LO P1 Assume that actual sales for the year are $480,000 (26,000 units), actual variable costs for the year are $112,000, and actual fixed costs for the year are $145,000. Prepare a flexible budget performance report for the year.

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Answer:

Sales ($20.00×26,000 units)                             $520,000

Less Variable Costs ( $4.00× 26,000 units)      $104,000

Contribution                                                          $416,000

Less Fixed Cost ($7.50× 26,000 units)               $195,000

Net Income                                                             $221,000

Explanation:

A flexed Budget shows the Budgeted Costs and Revenues for the Actual Activity at Budgeted/Standard Cost or Sales per Unit.

First Determine the Standard Cost and Selling Prices using an Activity level of 20,000 units

Sales ($400,000/ 20,000 units)                             $20.00

Less Variable Costs ( $80,000/ 20,000 units)         $4.00

Contribution                                                               $16.00

Less Fixed Cost ($150,000/ 20,000 units)                $7.50

Net Income                                                                  $8.50

Then Prepare a flexed Budget Performance at activity of 26,000 units

Sales ($20.00×26,000 units)                             $520,000

Less Variable Costs ( $4.00× 26,000 units)      $104,000

Contribution                                                          $416,000

Less Fixed Cost ($7.50× 26,000 units)               $195,000

Net Income                                                            $221,000

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