Whidbey Co Prepare a Flexible Budget for Whidbey Co

Essay

Whidbey Co. fixed budget for the year is shown below:
$\begin{array}{|l|c|c|}\hline \text { Sales (50,000 units) } & & \$ 1,300,000 \\\hline \text { Cost of goods sold: } & & \\\hline \text { Direct materials } & \$ 150,000 & \\\hline \text { Direct labor} & 450,000 & \\\hline\text { Overhead (includes } \$ 2 \text { per unit variable } \\\text { overhead) }& 240,000 & 840,000 \\\hline \text { Gross profit } & & \$ 460,000 \\\hline \text { Selling expenses: } & & \\\hline \text { Sales commissions (all variable) } & 60,000 & \\\hline \text { Rent (all fixed) } & 40,000 & \\\hline \text { Insurance (all fixed) } & 35,000 & \\ \hline \text {General and administrative expenses: } & & \\\hline \text { Salaries (all fixed) } & 72,000 & \\\hline & 54,000 & \\\hline \text { Depreciation (all fixed) ...... } & 31,000 & 292,000 \\\hline\text { Net income from operations }&&\$168,000\\ \hline\end{array}$ Prepare a flexible budget for Whidbey Co. that shows a detailed budget for its actual sales volume of 42,000 units. Use the contribution margin format.