Zip-up Company provides the following data developed for its master budget:Sales price ………………………$11.00 per unit Costs:? Direct materials ……………….$3.00 per unit Direct labor ……………………$4.75 per unit Variable overhead …………….$0.50 per unit Factory depreciation ………….$12,000 per month Supervision ……………………$13,000 per month Selling expense ………………..$0.25 per unit Administrative cost ……………$9,000 per monthRequired:Prepare flexible budgets for sales of 20,000, 22,000 and 24,000 units. Use a contribution margin format.
What will be an ideal response?
| ? | Variable Amount | Flexible Budget |
| ? | Per Unit | 20,000 Units | 22,000 Units | 24,000 Units |
| Sales……………………… | $11.00 | $220,000 | $242,000 | $264,000 |
| Variable costs: | ? | ? | ? | ? |
| Direct materials………… | $ 3.00 | 60,000 | 66,000 | 72,000 |
| Direct labor…………… | 4.75 | 95,000 | 104,500 | 114,000 |
| Variable overhead……… | 0.50 | 10,000 | 11,000 | 12,000 |
| Selling expenses………… | 0.25 | 5,000 | 5,500 | 6,000 |
| Total variable costs…… | $ 8.50 | $170,000 | $187,000 | $204,000 |
| Contribution margin | $ 2.50 | $ 50,000 | $ 55,000 | $ 60,000 |
| Fixed costs: | ? | ? | ? | ? |
| Factory depreciation…… | ? | $ 12,000 | $ 12,000 | $ 12,000 |
| Supervision…………… | ? | 13,000 | 13,000 | 13,000 |
| Administrative cost…… | ? | 9,000 | 9,000 | 9,000 |
| Total fixed costs………… | ? | $ 34,000 | $ 34,000 | $ 34,000 |
| Operating income | ? | $ 16,000 | $ 21,000 | $ 26,000 |
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