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 Unit20,000 Units22,000 Units24,000 Units
Sales………………………$11.00$220,000$242,000$264,000
Variable costs:????
  Direct materials…………$ 3.0060,00066,00072,000
  Direct labor…………… 4.7595,000104,500114,000
  Variable overhead……… 0.5010,00011,00012,000
  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……………?13,00013,00013,000
  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

Business

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