Sam operates his own summer lawn-mowing business using a truck and equipment used solely for business purposes.Sam budgets $10 per job for variable expenses (gas for his truck and equipment) and $500 per month for fixed expenses (insurance and leasepayments). Sam expected to have 100 mowing jobs during the month of June, but actually had 125.
How much should be reflected in the flexible budget for (1) variable expenses, (2) fixed expenses, and (3) total operating expenses?
Darshita Changed status to publish August 30, 2020
Answer:
The flexible budget is prepared using the original master budget assumptions for the
actual volume achieved (125 jobs) rather than the volume originally anticipated (100 jobs).
Therefore, the flexible budget should reflect the following expenses:
| 1 | The flexible budget should reflect $ | 1250 | for variable expenses. |
| 2 | The flexible budget should reflect $ | 500 | for fixed expenses. |
| 3 | The flexible budget should reflect $ | 1750 | for total operating expenses. |
Darshita Changed status to publish August 30, 2020
