Sure! Let's go through the steps to calculate the flexible budget income when a company produces and sells 27,200 units.
### Step 1: Define the Given Values for the Fixed Budget
First, we need to summarize the given values for the fixed budget:
- Fixed Units: 21,100 units
- Fixed Sales: \[tex]$548,600
- Variable Costs: \$[/tex]63,300
- Fixed Costs: \[tex]$141,000
### Step 2: Calculate the Per Unit Values
To prepare a flexible budget, we need to determine the per unit values of sales and variable costs based on the fixed budget information.
1. Sales per Unit:
\[ \text{Sales per Unit} = \frac{\text{Fixed Sales}}{\text{Fixed Units}} \]
\[ \text{Sales per Unit} = \frac{\$[/tex]548,600}{21,100} \]
[tex]\[ \text{Sales per Unit} = \$26.0 \][/tex]
2. Variable Costs per Unit:
[tex]\[ \text{Variable Costs per Unit} = \frac{\text{Variable Costs}}{\text{Fixed Units}} \][/tex]
[tex]\[ \text{Variable Costs per Unit} = \frac{\$63,300}{21,100} \][/tex]
[tex]\[ \text{Variable Costs per Unit} = \$3.0 \][/tex]
### Step 3: Determine the Actual Units Produced and Sold
The company actually produced and sold 27,200 units.
### Step 4: Calculate the Flexible Budget Values
With the per unit values and the actual number of units, we can now calculate the flexible budget values.
1. Flexible Budget Sales:
[tex]\[ \text{Flexible Budget Sales} = \text{Sales per Unit} \times \text{Actual Units} \][/tex]
[tex]\[ \text{Flexible Budget Sales} = \$26.0 \times 27,200 \][/tex]
[tex]\[ \text{Flexible Budget Sales} = \$707,200 \][/tex]
2. Flexible Budget Variable Costs:
[tex]\[ \text{Flexible Budget Variable Costs} = \text{Variable Costs per Unit} \times \text{Actual Units} \][/tex]
[tex]\[ \text{Flexible Budget Variable Costs} = \$3.0 \times 27,200 \][/tex]
[tex]\[ \text{Flexible Budget Variable Costs} = \$81,600 \][/tex]
### Step 5: Calculate the Flexible Budget Income
Finally, we can calculate the flexible budget income by subtracting both the flexible budget variable costs and the fixed costs from the flexible budget sales.
1. Flexible Budget Income:
[tex]\[ \text{Flexible Budget Income} = \text{Flexible Budget Sales} - \text{Flexible Budget Variable Costs} - \text{Fixed Costs} \][/tex]
[tex]\[ \text{Flexible Budget Income} = \$707,200 - \$81,600 - \$141,000 \][/tex]
[tex]\[ \text{Flexible Budget Income} = \$484,600 \][/tex]
So, the flexible budget income for the production and sale of 27,200 units is \$484,600.
