Grenada Company Estimates Sales of 15,000 Units for the Upcoming

question 4

Essay

Grenada Company estimates sales of 15,000 units for the upcoming period.At this sales volume its budgeted income is as follows:
$\begin{array}{lcc}&\text {Per Unit}&\text {Total}\\\text { Sales } & \$ 60 & \$ 900,000 \\\text { Less variable costs: } & & \\\text { Manufacturing costs } & 30 & 450,000 \\\text { Selling and administrative costs } & \underline{10 }& \underline{ 150,000} \\\text { Contribution margin } & \$ 20 & \$ 300,000 \\\text { Less fixed costs: } & & \\\text { Manufacturing costs } & & 125,000\\\text { Selling and administrative costs } && \underline{ 155,000} \\\text { Net income } && \underline{\$ 20,000}\end{array}$

During the period the company actually produced and sold 18,000 units.
Required:
Prepare a flexible budget based on 18,000 units.

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