Prepare an excel spreadsheet that contains a flexible budget

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Reference no: EM13877041

Generating a Flexible Budget Balmer Corporation's master (static) budget for the year is shown below:

Sales (50,000 units) Cost of goods sold: Direct materials

$150,000

$1,600,000

Direct labor

450,000


Overhead (Variable overhead



applied at 40% of direct labor cost)

240,000

840,000

Gross profit


$ 760,000

Selling expenses:



Sales commissions (all variable)

$160,000


Rent (all fixed)

40,000


Insurance (all fixed)

30,000


General expenses:



Salaries (all fixed)

92,000


Rent (all fixed)

77,000


Depreciation (all fixed)

51,000

450,000

Operating income


$ 310,000

Required

1. During the year the company actually manufactured and sold 42,000 units of product. Prepare an Excel spreadsheet that contains a flexible budget for this level of output.

2. Suppose, however, that the actual level of output had been 52,000 units of output. Rerun your spread- sheet to generate a flexible budget for this level of output.

3. Of what relevance is the notion of "relevant range" when preparing pro forma budgets or a flexible budget for control purposes?

Reference no: EM13877041

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