Whidbey Co Prepare a Flexible Budget for Whidbey Co

question 102

Essay

Whidbey Co. fixed budget for the year is shown below:
$\begin{array}{|l|r|r|} \hline \text { Sales (50,000 units) } &&\$1,300,000\\\hline \text {Cost of goods sold: } &\\ \hline\text { Direct materials} &\$150,000\\\hline \text {Direct labor } &450,000\\\hline \text { Overhead (includes \( \$ 2 \) per unit variable } &\\\text {overhead) } &\underline{240,000}&\underline{840,000}\\ \hline \text { Gross profit } &&\$460,000\\ \hline\text { Selling expenses: } &\\\hline \text {Sales commissions (all variable) } &60,000\\\hline \text { Rent (all fixed) } &40,000\\ \hline\text {Insurance (all fixed) } &35,000\\\hline \text {General and administrative expenses: } &\\ \hline \text { Salaries (all fixed). } &72,000\\\hline \text {Rent (all fixed) } &54,000\\\hline \text {Depreciation (all fixed) } &\underline{31,000}&\underline{292,000}\\\hline \text { Net income from operations } &&\underline{\$168,000}\\ \hline\end{array}$
Prepare a flexible budget for Whidbey Co. that shows a detailed budget for its actual sales volume of 42,000 units. Use the contribution margin format.

Execute proper journal entries for the initial recognition of finance and operating leases by lessors.

Recognize how initial direct costs are handled in operating leases.

Understand the classification and accounting treatment of finance leases vs. operating leases.

Appreciate the significance of fair value measurement at the inception of a lease.

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Definitions:

Consciousness

The state of being aware of and able to think about one's own existence, sensations, thoughts, and surroundings.

Cerebral Hemisphere

Each of the two parts of the brain (left and right) responsible for different functions, with the left typically handling logical reasoning and the right more involved in creative tasks.

Brainstem

The lower part of the brain that connects the cerebrum with the spinal cord and controls vital functions such as breathing and heart rate.

Neurons

Specialized cells transmitting nerve impulses; the basic units of the brain and nervous system.