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Problem 1. (8 Points). Engineworks Co. provides the following fixed budget data for...

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Accounting

Problem 1. (8 Points).

Engineworks Co. provides the following fixed budget data for the year:

Sales (20,000 units) . $600,000
Cost of sales:
Direct materials .. $200,000
Direct labor 160,000
Variable overhead .. 60,000
Fixed overhead .. 80,000 500,000
Gross profit . $100,000
Operating expenses:
Fixed .. $12,000
Variable . 40,000 52,000
Income from operations .. $ 48,000

The company's actual activity for the year follows:
Sales (21,000 units) . $651,000
Cost of goods sold:
Direct materials .. $231,000
Direct labor 168,000
Variable overhead .. 73,500
Fixed overhead .. 77,500 550,000
Gross profit . $101,000
Operating expenses:
Fixed . 12,000
Variable . 39,500 51,500
Income from operations . $ 49,500

Required:

Prepare a flexible budget performance report for the year using the contribution margin format.

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