Preparation of a Flexible Budget

Preparation of a Flexible Budget -...

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Preparation of a Flexible Budget The flexible budget uses the same selling price and cost assumptions as the original budget.  Variable and fixed costs do not change categories. The  variable  amounts are recalculated using the  actual level of activity, which in the case of the income statement is sales units. Each flexible budget  line will be discussed separately.  Sales . The original budget assumed 17,000 Pickup Trucks would be sold at $15 each. To prepare the  flexible budget, the units will change to 17,500 trucks, and the actual sales level and the selling price  will remain the same. The $262,500 is 17,500 trucks times $15 per truck. The variance that exists  now is simply due to price. Given that the variance is unfavorable, management knows the trucks  were sold at a price below the $15 budgeted selling price.  Cost of Goods Sold . Using the cost data from the budgeted income statement, the expected total 
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Preparation of a Flexible Budget -...

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