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Question
Thomas 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 companys 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 | |
Prepare a flexible budget performance report for the year using the contribution margin format.
Answer
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