Can someone please help? How do you calculate Fixed Cost for Flexible Budget Equation? It's $240,000 for Fixed OH and $225,000 for Fixed S&A for all 3 months. How did they get this amount? This is from Wiley Testbank.
Perry Pineda is the CEO of Pineda, Inc., a manufacturing company. Tom Ceria is an accountant and budget analyst at Pineda, Inc. Tom prepared a Static Budget for the third quarter of 20×7 based upon the following revenue and cost formulae:
Per Unit:
Revenue $19.50
Variable Costs
Direct Materials 1.90
Direct Labor 4.50
Manufacturing Overhead 0.85
Selling and Administrative Expenses 0.48
Fixed Costs:
Manufacturing Overhead $275,000.00
Selling and Administrative Expenses 245,000.00
The company forecasted 52,000, 65,000, and 72,000 units sold in July, August, and September respectively.
The actual results were as follows:
July August September 3rd Quarter
Units sold 55,000 70,000 71,000 196,000
Revenue $ 1,051,050.00 $ 1,342,500.00 $ 1,366,750.00 $ 3,760,300.00
Variable Costs
Direct Materials 124,000.00 154,000.00 158,000.00 436,000.00
Direct Labor 238,000.00 304,500.00 311,000.00 853,500.00
Variable Overhead 42,500.00 54,600.00 61,000.00 158,100.00
Selling and Administrative Expenses 25,200.00 34,300.00 36,200.00 95,700.00
Total Variable Costs 429,700.00 547,400.00 566,200.00 1,543,300.00
Contribution Margin 621,350.00 795,100.00 800,550.00 2,217,000.00
Fixed Costs
Manufacturing Overhead 250,000.00 247,000.00 237,000.00 734,000.00
Selling and Administrative Expenses 220,000.00 209,000.00 228,000.00 657,000.00
Total Fixed Costs 470,000.00 456,000.00 465,000.00 1,391,000.00
Net Operating Income $ 151,350.00 $ 339,100.00 $ 335,550.00 $ 826,000.00
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