Homework SourseHyson Inc manufactures and sells produces The master budget
Hyson Inc. manufactures and sells produces. The master budget and the actual results for July are as follows:
Actual July Sales
Master Budget
Un it sales
12,000
10,000
Sales
$132,000
$100,000
Variable costs
$70,800
$60,000
Contribution margin
$61,200
$40,000
Fixed costs
$30,000
$25,000
Operating income
$31,200
$15,000
If flexible budgeting is used, how much is contribution margin per unit based on actual sales of 12,000 units?
(A)
$4.00
(B)
$5.10
(C)
$4.55
(D)
None of the above
How much is the operating income for Hyson Inc. using a flexible budget for July?
(A)
$31,200
(B)
$21,000
(C)
$23,000
(D)
$15,000
please explain answer
| Actual July Sales | Master Budget | |
| Un it sales | 12,000 | 10,000 |
| Sales | $132,000 | $100,000 |
| Variable costs | $70,800 | $60,000 |
| Contribution margin | $61,200 | $40,000 |
| Fixed costs | $30,000 | $25,000 |
| Operating income | $31,200 | $15,000 |
Solution
Answer of Part 1: The correct answer is A i.e. $4
Budgeted Selling price per unit = Master Sales / Master unit sales
Budgeted Selling price per unit = $100,000 / 10,000
Budgeted Selling price per unit = $10
Budgeted Variable Costs per unit = Master Variable Cost / Master unit
Budgeted Variable Cost per unit = $60,000 / 10,000
Budgeted Variable cost per unit = $6
Budgeted Contribution Margin per unit = Budgeted Selling price per unit – Budgeted Variable cost per unit
Budgeted Contribution Margin per unit = $10 - $6
Budgeted Contribution Margin per unit = $4
Answer of Part 2: The correct answer is C i.e. $23,000
Budgeted Contribution Margin = $4 * 12,000
Budgeted Contribution Margin = $48,000
Operating Income = Budgeted Contribution Margin – Master Fixed Costs
Operating Income = $48,000 - $25,000
Operating Income = $23,000
