Exercise 61 Waterway Sports sells volleyball kits that it pu

*Exercise 6-1 Waterway Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 2,000 kits was prepared for the year. Fixed operating expenses account for 80% of total operating expenses at this level of sales. Sales Revenue Cost of goods sold (all variable) Gross margin Operating expenses Operating income $100,170 60,000 40,170 35,020 $ 5,150 Prepare a flexible budget based on sales of 1,407, 2,930, and 3,760 units. (Round unit values to 2 decimal places e.g. 15.25 and all other answers to O decimal places, e.g. 1525. If operating income is negative, enter amounts using a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Unit 1,407 2,930 3,760 Question Attempts: 0 of 5 used

Solution

Unit 1407 2930 3760 Sales 50.09 70477 146764 188338 Less: Variable expenses Cost of goods sold 30 42210 87900 112800 Operating expenses 3.5 4925 10255 13160 Total variable expenses 33.5 47135 98155 125960 Contribution margin 16.59 23342 48609 62378 Fixed expenses 28016 28016 28016 Net operating inome(loss) -4674 20593 34362