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:

Monocots

refer to a group of flowering plants whose seeds typically contain one embryonic leaf, or cotyledon.

Cotyledons

Embryonic leaves in seed-bearing plants, which are the first to appear from a germinating seed and play a key role in photosynthesis and nutrient storage.

Vascular Bundles

Structures in plants that contain xylem and phloem tissues, responsible for transporting water, nutrients, and sugars.

Flesh

The soft tissue of the body, especially muscle and fat, that covers the bones and is beneath the skin.