Jake Co Has Prepared the Following Fixed Budget for the Year

question 54

Essay

Jake Co. has prepared the following fixed budget for the year, assuming production and sales of 30,000 units. This level of production represents 80% of capacity.
$\text { Take Co. Fixed Budget for Year Ending December } 31$
$\begin{array}{|l|r|r|} \hline \text { Sales } &&\$1,500,000\\\hline \text { Cost of goods sold:} &\\\hline \text { Direct materials } &\$540,000\\ \hline \text { Direct labor} &300,000\\ \hline \text { Indirect materials (variable)} &15,000\\\hline \text { Indirect labor (variable) } &21,000\\\hline \text { Depreciation } &180,000\\\hline \text {Salaries } &90,000\\ \hline \text { Utilities ( \( 80 \% \) fixed)} &54,000\\\hline \text { Maintenance (40\% variable) } &\underline{33,000}&\underline{1,233,000}\\ \hline \text {Gross profit } &&\$267,000\\\hline \text { Operating expenses: } &\\\hline \text { Commissions. } &\$45,000\\\hline \text {Advertising (fixed) } &60,000\\\hline \text { Wages (variable) } &15,000\\\hline \text { Rent } &\underline{30,000}\\\hline \text {Total operating expenses } &&\\underline{150,000}\\\hline \text { Income from operations} &&\underline{\$117,000}\\\hline \end{array}$
Calculate the following flexible budget amounts at the indicated levels of capacity:
$$\begin{array} { | l | l | l | l | } \hline & \begin{array} { l } \text { Operations at } \\60 \% \text { of Capacity }\end{array} & & \begin{array} { l } \text { Operations at } \\75 \% \text { of Capacity }\end{array} \\\hline \text { Sales } & & & \\\hline \text { Total variable costs } & & & \\\hline \text { Total fixed costs } & & & \\\hline \text { Income from operations } & & & \\\hline\end{array}$$

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Definitions:

Rewarding Opportunities

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Not-invented-here Syndrome

A mindset or culture within an organization that undervalues or dismisses ideas or products because they were not developed internally.

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The process of recognizing and valuing the unique, internal knowledge possessed by members within an organization or community.

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The process of promoting brain activity through learning and mental exercises, potentially improving cognitive functions and creativity.