The Ota Company provides package delivery services in Osaka, Japan. All monetary figures are in millions of Japanese yen (). Flexible budgets for possible 1998 activity levels of 125,000, 150,000, and 175,000 deliveries are as follows:

Deliveries in 1998 were 135,000. Sales revenues were 130 million. Actual variable expenses were 42 million; semivariable expenses were 37.5 million; and fixed expenses were 29.6 million.

Required: 

1. Using flexible budgeting based on units, what should Ota have earned? What was earned? 

2. If the flexible budget is based on sales in yen, what should Ota have earned? 

3. Comment on the comparison of the two flexible budgets you prepared.

Transcribed Image Text:

Units of deliveries Sales. Variable expenses Semivariable expenses. Fixed expenses Total expenses. Net income. 125,000 150,000 175,000 125.0 \ 150.0 175.0 37.5 45.0 52.5 35.0 40.0 45.0 30.0 30.0 30.0 102.5 \ 115.0 127.5 22.5 35.0 Y 47.5