Fill in the Blanks to Complete the Flexible Budget for Davidson

question 134

Essay

Fill in the blanks to complete the flexible budget for Davidson Company. $\begin{array} { l }&\text { Budget Formula perUnit} & &\text { Various Levels of Output}&\$25,000 \\\text { Units }&\_\_\_&3,000&3,500&4,000\\\text { Sales }&\$25\\\text { Variable costs: }\\\text { Manufacturing }&\$8&\_\_\_&\_\_\_&\_\_\_\\\text { Administrative }&&\_\_\_&\$10,500&\_\_\_\\\text { Fixed costs: }\\\text { Manufacturing }&\_\_\_&\_\_\_\\\text { Administrative }&\$12,500&\_\_\_&\_\_\_\\\text { Operating income / (loss) }&\_\_\_&\_\_\_&\_\_\_\\\end{array}$ Answer:
Various Levels of Output
$\begin{array}{llll}\text { Units } & 3,000 & 3,500 & 4,000 \\\text { Sales } & \$ 75,000 & \$ 87,500 & \$ 100,000 \\\text { Variable costs: } & & & \\\text { Manufacturing } & 24,000 & 25,000 & 32,000 \\\text { Administrative } & \mathbf{9 , 0 0 0} & 10,500 & 12,000\\\text { Fixed costs: }\\\text { Manufacturing } & 25,000 & 25,000 & 25,000 \\\text { Administrative } & 12,500 & 12,500 & 12,500\\\text { Operatingincome / (loss) }&\$4,500&\$11,500&\$18,500\end{array}$

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Definitions:

Franchising

A business model wherein a business owner licenses their business logo, name, and operating model to an external party or franchisee.

Franchising Relationship

A business model that involves a contractual partnership between a franchisor and franchisee to use the franchisor's brand and operating methods.

Franchisor

A business entity that grants the right to an individual or group to carry out commercial activities using its branding, system, and intellectual property in exchange for a fee and adherence to agreed specifications.

Corporate Brand

The collective identity, values, and personality of a company as perceived by the public, employees, and stakeholders.