Firenze Company's Fixed Budget for the First Quarter of the Calendar

Essay

Firenze Company's fixed budget for the first quarter of the calendar year appears below. Prepare flexible budgets that show variable costs per unit, fixed costs and two different flexible budgets for sales volumes of 22,000 and 24,000.
$$\begin{array} { l | l | l } \text { Sales (20,000 units) } & & \$ 800,000 \\\hline \text { Cost d goods sold: } & & \\\hline \text { Direct materials } & \$ 160,000 & \\\hline \text { Direct labor } & 150,000 & \\\hline \text { Variable overhead } & 100,000 & \\\hline \text { Fixed overhead } & 120,000 & 530,000 \\\hline \text { Gross profit } & & \$ 270,000 \\\hline \text { Selling expenses: } & & \\\hline \text { Sales commistions (all variable) } & 40,000 & \\\hline \text { Advertising (all fixed) } & 50,000 & \\\hline \text { General and administrative expenses: } & & \\\hline \text { Salaries (all fixed) } & 80,000 & \\\hline \text { Rent (all fixed) } & 30,000 & \\\hline \text { Depreciation (all fixed) } & 20,000 & 220,000 \\\hline \text { Net income from operations } & & \$ 50,000 \\\hline & &\end{array}$$