# solution - In making the flexible budget we first calculate...

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The fixed costs are fixed and do not change with the levels. Budget Rate per \$ of revenue Net Revenue 8,000,000 Variable Costs Fuel 160,000 0.02 Repairs and maintenance 80,000 0.01 Supplies and miscellaneous 800,000 0.1 Variable payroll 5,360,000 0.67 Total variable costs 6,400,000 0.8 We then use these rates to calculate the variable cost at different levels of revenue Flexible Budget Amounts Revenue (1) 7,600,000.00 8,000,000.00 8,400,000.00 Fuel 152,000.00 160,000.00 168,000.00 Repairs and maintenance 76,000.00 80,000.00 84,000.00 Supplies and miscellaneous 760,000.00 800,000.00 840,000.00 Variable payroll 5,092,000.00 5,360,000.00 5,628,000.00 Total variable costs (2) 6,080,000.00 6,400,000.00 6,720,000.00 Supervision 180,000.00 180,000.00 180,000.00 Rent 160,000.00 160,000.00 160,000.00 Depreciation 480,000.00 480,000.00 480,000.00 Other fixed costs 160,000.00 160,000.00 160,000.00 Total fixed costs (3) 980,000.00 980,000.00 980,000.00 Total costs (4) = (2) + (3) 7,060,000.00 7,380,000.00 7,700,000.00 Operating income (1) - (4) 540,000.00 620,000.00 700,000.00 The variable costs are \$0.80 per dollar of revenue as we have calculated earlier and the total fixed cost The formula is \$980,000 per quarter plus .80 of revenue In a condensed report we group all variable costs together. (1) (2) (3) Actual (1)-(3) Flexible Results Budget at Actual Flexible for Actual Activity Budget Sales Level Variances Activity Net revenue 7,600,000 - 7,600,000 Total variable costs 6,230,000 150,000U 6,080,000 Contribution margin 1,370,000

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solution - In making the flexible budget we first calculate...

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