Big Bend Co Prepare a Flexible Budget for Big Bend Co

question 44

Essay

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

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Definitions:

Professional Baseball Batting Averages

A statistical measure used in baseball to evaluate a player's batting performance, calculated by dividing a player's hits by their total at-bats.

Normal Curve

The normal curve, also known as the bell curve, is a graphical representation of a normal distribution, where most occurrences take place near the mean, with fewer instances happening as one moves away from the mean.

Correlation

A numerical index reflecting how much two or more variables move in conjunction with one another.

Variables

Variables refer to characteristics or quantities that can vary or change among individuals or over time.