McElroy Company Has Prepared the Following Master Budget for 2013

question 77

Essay

McElroy Company has prepared the following master budget for 2013. Although McElroy has the capacity to manufacture 50,000 units, management expected the likely demand for its product to be 40,000 units in 2013; as such, it prepared the master budget to manufacture and sell 40,000 units. In early January 2014, the company was pleasantly surprised to find out that it manufactured and sold 45,000 units in 2013. Required:
Prepare the flexible budget (FB) for the actual operating level achieved in 2013.

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Definitions:

Death Rates

A statistical figure showing the number of deaths per year, often per 1,000 individuals, in a particular population.

World Commodity Prices

The prices of raw materials and agricultural products that are traded on a global scale.

BTU

British Thermal Unit, a measure of heat energy used in the power, steam generation, heating, and air conditioning industries.

British Thermal Unit

A measure of heat energy defined as the amount needed to raise the temperature of one pound of water by one degree Fahrenheit.