Question
A chair manufacturer has established the following flexible budget for the month: Units Produced and Sold 1,000 1,500 2,000 Sales$10,000 $15,000 $20,000 Variable Costs (5,000)(7,500)
A chair manufacturer has established the following flexible budget for the month: Units Produced and Sold 1,000 1,500 2,000 Sales$10,000 $15,000 $20,000 Variable Costs (5,000)(7,500) (10,000) Fixed Costs (2,000) (2,000) (2,000) Profit $3,000 $5,500$8,000
A.) What is the sales price per chair? B.) What is the expected profit if 1,600 chairs are made? C.) Describe a flexible budget and the advantages of a flexible budget over a static budget. How might a flexible budget be used as a tool to influence management's behavior? Provide an example in your answer.
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