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drw92 drw92
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2 months ago
New Rock, Inc. sells video games it has purchased from a local distributor. The following static budget is based on sales of 8,000 games. However, New Rock only sold 7,800 games during the year. Fixed costs are 30% of total operating expenses.

Sales$512,000
Cost of goods sold (variable)230,000
Gross margin282,000
Operating expenses220,000
Operating income$  62,000

Required:

Prepare a flexible budget.
Textbook 

Managerial Accounting


Edition: 4th
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rbacon2rbacon2
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2 months ago
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More solutions for this book are available here
Selling price per unit = $512,000 ÷ 8,000 = $64.00
Variable cost of goods sold per unit = $230,000 ÷ 8,000 = $28.75
Variable operating expenses = ($220,000 × 70%) ÷ 8 = $19.25

New Rock, Inc.
Flexible Budget
Sales revenue (7,800 × $64)$499,200
Cost of goods sold (7,800 × $28.75)224,250
Gross profit274,950
Variable operating expenses (7,800 × 19.25)150,150
Fixed operating expenses ($220,000 × 30%)  66,000
Operating income$  58,800


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drw92 Author
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2 months ago
Smart ... Thanks!
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Yesterday
this is exactly what I needed
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2 hours ago
Thanks
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