Preparing a flexible budget

Reference no: EM13826202

Problem:

The Cabazos Company is in the process of preparing a flexible budget to determine why operating profit fell below the budgeted amount. Complete the following flexible budget and list the reasons for the variance between budgeted and actual profit.

	Master Budget	Flexible budget	Actual Results
Sales volume (in units)	20,000		18,000

Sales Revenue	$1,050,000		$972,000
Variable costs	500,000		477,000
Contribution margin	550,000		495,000
Capacity-related (fixed) costs	380,000		385,000
Operating profit	$170,000		$110,000

Additional Information:

This question is basically belongs to the Finance as well as it explains about computation of flexible budget as well as reason for variance between budgeted and real profit.

Reference no: EM13826202

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