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Crane Corporations master (static) budget for the year is shown below: Sales (60,100 units) $ 1,923,200 Cost of goods sold: Direct materials $ 174,290 Direct
| Crane Corporations master (static) budget for the year is shown below: |
| Sales (60,100 units) | $ | 1,923,200 | ||||
| Cost of goods sold: | ||||||
| Direct materials | $ | 174,290 | ||||
| Direct labor | 456,760 | |||||
| Overhead (variable overhead applied at 45% of direct labor cost) | 241,000 | 872,050 | ||||
| Gross profit | $ | 1,051,150 | ||||
| Selling expenses: | ||||||
| Sales commissions (all variable) | $ | 162,270 | ||||
| Rent (all fixed) | 41,000 | |||||
| Insurance (all fixed) | 31,000 | |||||
| General expenses: | ||||||
| Salaries (all fixed) | 92,500 | |||||
| Rent (all fixed) | 77,500 | |||||
| Depreciation (all fixed) | 51,000 | 455,270 | ||||
| Operating income | $ | 595,880 | ||||
| Required: |
| 1. | During the year the company manufactured and sold 55,000 units of product. Prepare a flexible budget for this level of output. |
| 2. | Now suppose, that the actual level of output was 65,100 units. Prepare a flexible budget for this level of output. |
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