Brodrick Company expects to produce 21,600 units for the year ending December 31. A flexible budget for 21,600 units of production reflects sales of $496,800; variable costs of $64,800; and fixed costs of $140,000. QS 23-3 Flexible budget LO P1 If the company instead expects to produce and sell 26,300 units for the year, calculate the expected level of income from operations.

Brodrick Company

If the company instead expects to produce and sell 26,300 units for the year, the expected level of income from operations is:

= $386,000.

Explanation:

a) Data and Calculations:

Expected production for the year ending December 31 = 21,600 units

Sales based on 21,600 units = $496,800  ($23 per unit)

Variable costs on 21,600 units     64,800  ($3 per unit)

Contribution margin =              $432,000  ($20 per unit

Fixed costs =                               140,000

Net operating income =          $292,000

Expected level of income from operations (26,300 units):

Sales revenue (26,300 * $23)  = $604,900

Variable costs (26,300 * $3)  =        78,900

Contribution margin                    $526,000

Fixed costs =                                   140,000

Net operating income =              $386,000

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