Chapter 7 Homework B Alternate problem D Use the following data for Andrea Company in preparing its planned operating budget: Plant capacity Expected sales volume Forecasted se price 500,000 units 450,000 units $72 per unit Variable manufacturing costs per unit: Direct materials Direct labor $27.00 9.00 Manufacturing overhead 6.00 Fixed manufacturing overhead per period $900,000 Selling and administrative expenses: Variable (per unit) Fixed (per period) $3.00 $ 750,000 Assume no beginning inventory. Federal income taxes are budgeted at 40% ofincome before income taxes. The actual results for Andrea Company for the year ended December 31, follow. (Note: The actual sales price was $8o per unit.) Sales (500,000 units Cost of goods sold: $80 per unit) $40,000,000 Direct materials Direct labor Variable manufacturing overhead Foxed manufacturing overhead $12,000,000 4,400,000 4,000,000 Gross margin Selling and administrative expenses: Variable $ 1,400,000 Foxed 2.200000 $16,400,000 Income before federal income taxes Deduct: Federal income taxes Net income a. Prepare a planned operating budget for the year ended December 3a using the expected sales volume. b. Using a flexible operating budget based on actual sales volume, analyze the efficiency of operations. Comment on the results