Fournier Fixtures produces a variety of manufactured items for the home and building industry. The...
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Accounting
Fournier Fixtures produces a variety of manufactured items for the home and building industry. The company produces only when it receives orders and, therefore, has no inventories. The following information is available for the current month:
| Actual (based on actual orders for 392,000 units) | Master Budget (based on budgeted orders for 350,000 units) | |
|---|---|---|
| Sales revenue | $ 7,448,000 | $ 7,000,000 |
| Less | ||
| Variable costs | ||
| Materials | 2,600,000 | 2,310,000 |
| Direct labor | 230,000 | 210,000 |
| Variable overhead | 1,180,000 | 1,050,000 |
| Variable marketing and administrative | 860,000 | 770,000 |
| Total variable costs | $ 4,870,000 | $ 4,340,000 |
| Contribution margin | $ 2,578,000 | $ 2,660,000 |
| Less | ||
| Fixed costs | ||
| Manufacturing overhead | 1,560,000 | 1,580,000 |
| Marketing | 475,000 | 460,000 |
| Administrative | 300,000 | 325,000 |
| Total fixed costs | $ 2,335,000 | $ 2,365,000 |
| Operating profits | $ 243,000 | $ 295,000 |
Required:
Prepare a flexible budget for Fournier Fixtures.
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