Anniston Co. planned to produce and sell 40,000 units. At that volume level, variable costs are determined to be $320,000 and fixed costs are $30,000. The planned selling price is $10 per unit. Anniston actually produced and sold 42,000 units.Using a contribution margin format:(a) Prepare a fixed budget income statement for the planned level of sales and production.(b) Prepare a flexible budget income statement for the actual level of sales and production.
What will be an ideal response?
| a. | Sales (40,000 units ? $10 each) …………………….. | $400,000 |
| ? | Variable costs ($320,000/40,000 units = $8 each) …. | 320,000 |
| ? | Contribution margin ………………………………... | $ 80,000 |
| ? | Fixed costs …………………………………………. | 30,000 |
| ? | Operating income ………………………………….. | $ 50,000 |
| ? | ? | ? |
| b. | Sales (42,000 units ? $10 each) ……………………. | $420,000 |
| ? | Variable costs (42,000 units ? $8 each) ……………. | 336,000 |
| ? | Contribution margin ……………………………….. | $ 84,000 |
| ? | Fixed costs …………………………………………. | 30,000 |
| ? | Operating income …………………………………... | $ 54,000 |
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