Elroy CoHas Prepared the Following Fixed Budget for the Year, Assuming

question 130

Essay

Elroy 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.
$\begin{array}{c}\text { ELROY CO. }\\\text { Fixed Budget }\\\text { For Year Ending December 31 }\\\hline \begin{array}{lr}\text { Sales }&&\$ 1,500,000\\\text { Cost of goods sold: }\\\text { Direct materials } & \$ 540,000 \\\text { Direct labor } & 300,000 \\\text { Indirect materials (variable) } & 15,000 \\\text { Indirect labor (variable) } & 21,000 \\\text { Depreciation } & 180,000 \\\text { Salaries } & 90,000 \\\text { Utilities ( } 80 \% \text { fixed) } & 54,000 \\\text { Maintenance ( } 40 \% \text { variable) } & \underline { 33,000}& \underline {1,233,000}\\\text { Gross profit }&&\$ 267,000\\\text { Operating expenses: }\\\text { Commissions } & \$ 45,000 \\\text { Advertising (fixed) } & 60,000 \\\text { Wages (variable) } & 15,000 \\\text { Rent } & \underline { 30,000 }\\\text { Total operating expenses }&& \underline{150,000}\\\text { Income from operations }&& \underline{\$ 117,000}\\\end{array}\end{array}$ Calculate the following flexible budget amounts at the indicated levels of capacity:
$\begin{array}{ll}&\text { Operations at } & \text { Operations at } \\ &\underline {60 \% \text { of Capacity } }& \underline{75 \% \text { of Capacity }}\\ \text { Sales } &\underline { \quad\quad\quad\quad\quad\quad\quad } &\underline { \quad\quad\quad\quad\quad\quad\quad } \\ \text {Total variable costs } &\underline { \quad\quad\quad\quad\quad\quad\quad } &\underline { \quad\quad\quad\quad\quad\quad\quad } \\ \text { Total fixed costs } &\underline { \quad\quad\quad\quad\quad\quad\quad } &\underline { \quad\quad\quad\quad\quad\quad\quad } \\ \text { Income from operations } &\underline { \quad\quad\quad\quad\quad\quad\quad } &\underline { \quad\quad\quad\quad\quad\quad\quad } \\\end{array}$

---

Definitions:

Unfamiliar

Not known or recognized by someone due to lack of knowledge or experience.

Delays

The act of postponing or slowing down tasks, resulting in a deviation from the planned schedule.

MS Excel

MS Excel is a spreadsheet program developed by Microsoft, widely used for data analysis, visualization, and complex calculations, part of the Microsoft Office suite.

Windows Operating System

A family of graphical operating systems developed and marketed by Microsoft, commonly installed on personal computers, laptops, and servers.