Jake Co Has Prepared the Following Fixed Budget for the Year

Essay

Jake Co. has prepared the following fixed budget for the year, assuming production and sales of 30,000 units. This level of production represents 80% of capacity.
Jake Co. Fixed Budget for Year Ending December 31
$\text { Jake Co. Fixed Budget for Year Ending December } 31$
$\begin{array}{|l|c|c|}\hline \text { Sales } & & \$ 1,500,000 \\\hline \text { Cost of goods sold: } & & \\\hline \text { Direct materials } & \$ 540,000 & \\\hline \text { Direct labor } & 300,000 & \\\hline \text { Indirect materials (variable) } & 15,000 & \\\hline \text { Indirect labor (variable) } & 21,000 & \\\hline \text { Depreciation } & 180,000 & \\\hline \text { Salaries } & 90,000 & \\\hline \text { Utilities ( } 80 \% \text { fixed) } & 54,000 & \\\hline \text { Maintenance ( } 40 \% \text { variable) } & 33,000 & 1,233,000 \\\hline \text { Gross profit } & & \$ 267,000 \\\hline\end{array}$
$$\begin{array} { l | l | l } \hline \text { Operating expenses: } & & \\\hline \text { Commistions } \ldots \ldots \ldots \ldots \ldots \ldots \ldots & \$ 45,000 & \\\hline \text { Advertising (fixed) } \ldots \ldots \ldots \ldots \ldots \ldots & 60,000 & \\\hline \text { Wages (variable) } \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 15,000 & \\\hline \text { Rent } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 30,000 & \\\hline \text { Total operating Expentes } \ldots \ldots \ldots \ldots & & 150,000 \\\hline \text { Income from operations } \ldots \ldots \ldots \ldots \ldots \ldots & & \underline { \underline { \$ 117,000 } } \\\hline & &\end{array}$$ Calculate the following flexible budget amounts at the indicated levels of capacity:
$$\begin{array} { l | l | l | l } & \begin{array} { l } \text { Operations at } \\60 \% \text { of Capacity }\end{array} & & \begin{array} { l } \text { Operations at } \\75 \% \text { of Capacity }\end{array} \\\hline \text { Sales } & & & \\\hline \text { Total variable costs } & & & \\\hline \text { Total fixed costs } & & & \\\hline \text { Income from operations } & & &\end{array}$$