ACCT 521 Home Work 8 Question 3 PDF

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Summary

3. Award: 3 out of 3 pointsOsage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has noinventories. The following information is available for the current month:Actual (based on actual orders for 450,000 units)Master Budget (based on budgeted or...

Description

3.

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Award:

Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month: Actual (based on actual orders for 450,000 units) $4,975,000

Sales revenue Less Variable costs Materials Direct labor Variable overhead Variable marketing and administrative Total variable costs Contribution margin Less Fixed costs Manufacturing overhead Marketing Administrative Total fixed costs Operating profits

Master Budget (based on budgeted orders for 480,000 units) $4,800,000

1,536,000 245,000 530,100 445,500 $2,756,600 $2,218,400

1,536,000 312,000 480,000 456,000 $2,784,000 $2,016,000

883,100 276,000 199,000 $1,358,100

855,000 276,000 175,000 $1,306,000

$ 860,300

$ 710,000

Required: Prepare a flexible budget for Osage, Inc. (Do not round intermediate calculations.) OSAGE, INC. Flexible Budget Sales revenue

$ 4,500,000

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Variable costs: Materials Direct labor

1,440,000

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292,500

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Variable overhead

450,000

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Variable marketing and administrative

427,500

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Total variable costs

$ 2,610,000

Contribution margin

$ 1,890,000

Fixed costs: Manufacturing overhead

$

855,000

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Marketing

276,000

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Administrative

175,000

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Total fixed costs

$ 1,306,000

Operating profit (loss)

$

584,000

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Osage, Inc., manufactures and sells lamps. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:

Sales revenue Less Variable costs Materials Direct labor Variable overhead Variable marketing and administrative Total variable costs Contribution margin Less Fixed costs Manufacturing overhead Marketing Administrative Total fixed costs Operating profits

Actual (based on actual orders for 450,000 units) $4,975,000

Master Budget (based on budgeted orders for 480,000 units) $4,800,000

1,536,000 245,000 530,100 445,500 $2,756,600 $2,218,400

1,536,000 312,000 480,000 456,000 $2,784,000 $2,016,000

883,100 276,000 199,000 $1,358,100

855,000 276,000 175,000 $1,306,000

$ 860,300

$ 710,000

Required: Prepare a flexible budget for Osage, Inc. (Do not round intermediate calculations.) OSAGE, INC. Flexible Budget $

Sales revenue

4,500,000

Variable costs: Materials

1,440,000

Direct labor

292,500

Variable overhead

450,000

Variable marketing and administrative

427,500

Total variable costs

F

$

2,610,000

Contribution margin

F

$

1,890,000

$

855,000

Fixed costs: Manufacturing overhead Marketing

276,000

Administrative

175,000

Total fixed costs Operating profit (loss)

F F

$

1,306,000

$

584,000

 Explanation:

Sales revenue Variable costs: Materials Direct labor Variable overhead Variable marketing and administrative

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Flexible Budget (based on actual of 450,000 units) $4,500,000 1,440,000 292,500 450,000 427,500

Calculations (000 omitted for units) $4,800,000 × (450 ÷ 480) 1,536,000 312,000 480,000 456,000

× × × ×

(450 ÷ 480) (450 ÷ 480) (450 ÷ 480) (450 ÷ 480)...