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# Outdoor Outfitters has created a flexible budget for the 70-000-unit a.docx

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# Outdoor Outfitters has created a flexible budget for the 70-000-unit a.docx

Outdoor Outfitters has created a flexible budget for the 70,000-unit and the 80,000-unit levels of activity as shown below. Complete Outdoor Outfitters?s flexible budget at the 78,200-unit level of activity. Assume that the cost of goods sold and variable operating expenses vary directly with sales and that income taxes remain at 30 percent of operating income.
Solution
selling price per unit = 1,400,000 / 70,000 or 1,600,000/80,000 =\$ 4per unit
Cost of goods sold = 840000 /1400000 or 960000 /1600000 = 60%
operating expenses = (370000-90000)/ 700000 = \$ 4 per unitÂ Â  or (410000-90000)/80000 = \$ 4per unit
so 90000+ 4per unit

.

Outdoor Outfitters has created a flexible budget for the 70,000-unit and the 80,000-unit levels of activity as shown below. Complete Outdoor Outfitters?s flexible budget at the 78,200-unit level of activity. Assume that the cost of goods sold and variable operating expenses vary directly with sales and that income taxes remain at 30 percent of operating income.
Solution
selling price per unit = 1,400,000 / 70,000 or 1,600,000/80,000 =\$ 4per unit
Cost of goods sold = 840000 /1400000 or 960000 /1600000 = 60%
operating expenses = (370000-90000)/ 700000 = \$ 4 per unitÂ Â  or (410000-90000)/80000 = \$ 4per unit
so 90000+ 4per unit

.

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### Outdoor Outfitters has created a flexible budget for the 70-000-unit a.docx

1. 1. Outdoor Outfitters has created a flexible budget for the 70,000-unit and the 80,000-unit levels of activity as shown below. Complete Outdoor Outfitters?s flexible budget at the 78,200-unit level of activity. Assume that the cost of goods sold and variable operating expenses vary directly with sales and that income taxes remain at 30 percent of operating income. Solution selling price per unit = 1,400,000 / 70,000 or 1,600,000/80,000 =\$ 4per unit Cost of goods sold = 840000 /1400000 or 960000 /1600000 = 60% operating expenses = (370000-90000)/ 700000 = \$ 4 per unitÂ Â or (410000-90000)/80000 = \$ 4per unit so 90000+ 4per unit 78200 UNITS sales [78200*20] 1,564,000 cost of goods sold (60*sales) (938,400) Gross profit 625,600 Operating expenses (90000 + [4*units sold] (402,800) Operating income 222,800 Income tax ( 30% of operating income) (66,840) Net income 155,960