Static and Flexible Budgets Graham Corporation used the following data to evaluate its current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit.

Actual Budgeted

Units sold 991,000 1,000,000

Variable costs 1,280,000 1,500,000

Fixed costs 955,000 905,000

Prepare the actual income statement, flexible budget, and static budget.

Question

Donovan Banks

Business

4 January, 15:31

Static and Flexible Budgets Graham Corporation used the following data to evaluate its current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit.

Actual Budgeted

Units sold 991,000 1,000,000

Variable costs 1,280,000 1,500,000

Fixed costs 955,000 905,000

Prepare the actual income statement, flexible budget, and static budget.

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Deborah · Answer 1

Actual Budgeted

Units sold 991,000 1,000,000

Variable costs 1,280,000 1,500,000

Fixed costs 955,000 905,000

Actual Results Flexible Budget Static Budget

Units sold 991,000 991,000 1,000,000

Revenues $9,910,000 $9,910,000 $10,000,000

Variable costs - $1,280,000 - $1,486,500 - $1,500,000

Contr. margin $8,630,000 $8,423,500 $8,500,000

Fixed costs - $955,000 - $905,000 - $905,000

Operating income $7,675,000 $7,518,500 $7,595,000

The static budget only considers standard revenue (units sold and price) and costs (both variable and fixed). While a flexible budget will be calculated using standard costs but with actual units sold and produced. Both static and flexible budgets use the same fixed costs, only variable costs and revenues differ.