Brodrick Company expects to produce 20,500 units for the year ending December 31. A flexible budget for 20,500 units of production reflects sales of $410,000; variable costs of $61,500; and fixed costs of $141,000.

QS 23-3 Flexible budget LO P1

a) If the company instead expects to produce and sell 26,100 units for the year, calculate the expected level of income from operations.

b) Assume that actual sales for the year are $479,000 (26,100 units), actual variable costs for the year are $113,000, and actual fixed costs for the year are $131,000. Prepare a flexible budget performance report for the year. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance.)