Calculate Flexible Budget
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Question
The Cabazos Company is in the process of preparing a flexible budget to determine why operating profit fell below the budgeted amount. Complete the following flexible budget and list the reasons for the variance between budgeted and actual profit.
|
|
Master Budget |
Flexible budget |
Actual Results |
|
Sales volume (in units) |
20,000 |
|
18,000 |
|
|
|
|
|
|
Sales Revenue |
$1,050,000 |
|
$972,000 |
|
Variable costs |
500,000 |
|
477,000 |
|
Contribution margin |
550,000 |
|
495,000 |
|
Capacity-related (fixed) costs |
380,000 |
|
385,000 |
|
Operating profit |
$170,000 |
|
$110,000 |
Summary
The question belongs to Finance and it discusses about calculation of flexible budget and reason for variance between budgeted and real profit.
Total Word Count 90
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