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Problem 1. (8 Points). Engineworks Co. provides the following fixed budget data for the year: Sales (20,000 units) . $600,000 Cost of sales: Direct materials
Problem 1. (8 Points).
Engineworks Co. provides the following fixed budget data for the year:
Sales (20,000 units) . | $600,000 | |
Cost of sales: | ||
Direct materials .. | $200,000 | |
Direct labor | 160,000 | |
Variable overhead .. | 60,000 | |
Fixed overhead .. | 80,000 | 500,000 |
Gross profit . | $100,000 | |
Operating expenses: | ||
Fixed .. | $12,000 | |
Variable . | 40,000 | 52,000 |
Income from operations .. | $ 48,000 |
The company's actual activity for the year follows: | ||
Sales (21,000 units) . | $651,000 | |
Cost of goods sold: | ||
Direct materials .. | $231,000 | |
Direct labor | 168,000 | |
Variable overhead .. | 73,500 | |
Fixed overhead .. | 77,500 | 550,000 |
Gross profit . | $101,000 | |
Operating expenses: | ||
Fixed . | 12,000 | |
Variable . | 39,500 | 51,500 |
Income from operations . | $ 49,500 |
Required:
Prepare a flexible budget performance report for the year using the contribution margin format.
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